Question
A construction company plans to invest in a housing project. There is a 30% chance that the company will lose $200,000 a 30% chance
A construction company plans to invest in a housing project. There is a 30% chance that the company will lose $200,000 a 30% chance it will lose $100,000, and a 40% chance of a $300,000 profit. Based ONLY on this information, what should the company do? The expected value is $60,000, so the company should proceed with the project. The expected value is -$90,000, so the company should not proceed with the project. The expected value is $30,000, so the company should proceed with the project. The expected value is $90,000, so the company should proceed with the project.
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