Answer: b) 15.7
<u>Step-by-step explanation:</u>
Look at the z-table (below) to find 0.2500
Notice that the value is not on the table but is between 0.2486 and 0.2517 which are located on the z-table at 0.67 and 0.68
The given value is closer to 0.2486 so use 0.67 as the z-score.
Now, let's find the x-value using the formula:
Answer:
probability that make risk neutral accepting project < or 33.33 %
Step-by-step explanation:
given data
income = $600 million
legal liability = $1,200 million
to find out
what is the theta such that it is indifferent between accepting and rejecting the contract
solution
we know here that risk neutral between accept and reject contract θ value will be as that when net present value NPV of contract = 0
so
we can say NPV > 0
so ( 1- θ ) $600 Million + θ ( $1200 Million) > 0
$600 Million > $1800 θ
θ < = 33.33 %
so probability that make risk neutral accepting project < or 33.33 %