A business firm is considering two investments.

It will choose the one that promises the greater payoff. Which of the investments should it accept? (Let the mean profit measure the payoff.)

Invest in Tool Shop Invest in Book Store Profit Probability Profit Probability

$100,000 0.10 $400,000 0.20 50,000 0.30 90,000 0.10 20,000 0.30 20,000 0.40

80,000 0.30 250,000 0.30 Total 1.00 Total 1.00