Homework Answers
| Solution | |
| Expected cash flow = Probablity*Cash Received | |
| Given | |
| 50% chance of Cash received is $2000 | |
| 50% chance of Cash received is $1000 | |
| Probablity of Receiving cash is .50 | |
| Now, | |
| Expected cash flow = Probablity*Cash Recived | |
| Expected cash flow = (.5*2000)+(.50*1000) | |
| =$1500 | |
| Acutally we get cash might be Any of following | |
| A | $2,000 |
| B | $1,000 |
| For case A | We often get cash |
| =$1500/$2000 | |
| =.75 times | |
| Probablity is 50% as given in question | |
| =.50 | |
| In term of Percentage | |
| =1500/2000*100 | |
| =75% | |
| For case B | We often get cash |
| =$1500/$1000 | |
| =1.5 times | |
| Probablity is 50% as given in question | |
| =.50 | |
| In term of Percentage | |
| =1500/1000*100 | |
| =150% | |
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