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An investor is considering a $10,000 investment in a start-up company. She estimates that she has probability 0.39 of a $22,200 loss, probability 0.23 of
An investor is considering a $10,000 investment in a start-up company. She estimates that she has probability 0.39 of a $22,200 loss, probability 0.23 of a $14,900 profit, probability 0.14 of a $52,000 profit, and probability 0.24 of breaking even (a profit of $0). What is the expected value of the profit? Would you advise the investor to make the investment?
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