A business executive is trying to decide whether to undertake one of two contracts or neither one. He has simplified the situation somewhat and feels that it is sufficient to imagine that the contracts provide alternatives as given in Table PI2.22.
TABLE PI2.22

(a) Should the executive undertake either one of the contracts? If so, which one? What would he do if he made decisions with an eye toward maximizing his expected NPW?
(b) What would be the probability that contract A would result in a larger profit than that of contract B?

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Contract A Contract B NPW Probability NPW Probability S100,000 50,000 0 0.2 0.4 0.4 540,000 10,000 -10,000 0.3 0.4 0.3