A business is considering building either a one-story or two-story apartment complex.

The value of the completed building will depend on the strength of the rental market when construction is finished. The subjective probability distributions for the net profit with each option are shown in Table 4.10. Use the mean and standard deviation to compare these two alternatives.

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Profit (millions of dollars) Rental Market Probability 1-Story 2-Story Strong 0.2 4 10 Medium 0.5 2 3 Weak 0.3 -1 -2