Under normal conditions (68% probability), Financing Plan A will produce $24,000 higher return than Plan B....
Under normal conditions (68% probability), Financing Plan A will produce $24,000 higher return than Plan B. Under tight money conditions (32% probability), Plan A will produce $31000 less than Plan B. What is the expected value of returns?
A) 6400
B) 44800
C) 5600
D) 50400
Homework Answers
| Money Condition | Probability | Returns | Return * Probability | Return * Probability |
| Normal | 68% | $ 24,000.00 | 24000*68% | $ 16,320.00 |
| Tight | 32% | $ (31,000.00) | (31000)*32% | $ (9,920.00) |
| Total | $ 6,400.00 | |||
| So option A is the correct solution. | ||||
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Under normal conditions (68% probability), Financing Plan A will
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