Compute the standard deviation of the payoffs for each decision. What does this tell you about the risk in making the decision?

Slaggert Systems is considering becoming certified to the ISO 9000 series of quality standards. Becoming certified is expensive, but the company could lose a substantial amount of business if its major customers suddenly demand ISO certification and the company do not have it. At a management retreat, the senior executives of the firm developed the following lowing payoff table, indicating the Net present value of profit over the Next 5 years.

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Customer Response Standards Standards Required Not Required Become certified $575,000 $500,000 Stay uncertified $450,000 $600,000