One of Mary’s investments is going to mature, and she wants to determine how to invest the proceeds of $50,000. Mary is considering three new investments: a business startup fund (BSF), a one-year certificate of deposit (CD) with a guarantee of 4.5% return, or a communication technology stock called New 5 G Technology(N5G). Mary estimates the return on BSF as 15%, 9%, -3% or -12%, and the return on N5G as 33%, 28%, -13% or -22%, depending on whether market conditions are excellent, good, average, or poor, respectively. Mary also has been collecting financial market information daily and estimates the probabilities of an excellent, good, average, and poor market to be 0.23, 0.20, 0.47, and 0.10, respectively What is the EVPI?
One of Mary’s investments is going to mature, and she wants to determine how to invest the proceeds of $50,000. Mary is considering three new investments: a business startup fund (BSF), a one-year cer...
One of Mary’s investments is going to mature, and she wants to determine how to invest the proceeds of $50,000. Mary is considering three new investments: a business startup fund (BSF), a one-year certificate of deposit (CD) with a guarantee of 4.5% return, or a communication technology stock called New 5 G Technology(N5G). Mary estimates the return on BSF as 15%, 9%, -3% or -12%, and the return on N5G as 33%, 28%, -13% or -22%, depending on whether market...
• One of Philip’s investments is going to mature, and he wants to determine how to invest the proceeds of $50,000. Philip is considering two new investments: a stock mutual fund and a one-year certificate of deposit (CD). The CD is guaranteed to pay a 3% return. Philip estimates the return on the stock mutual fund as 11%, 2%, or -9%, depending on whether market conditions are good, average, or poor, respectively. Philip estimates the probability of a good, average,...