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D You are thinking to establish an agro-based farm after graduation, and you have two options (I) crop farm or (II) dairy farm. Crop farm
D You are thinking to establish an agro-based farm after graduation, and you have two options (I) crop farm or (II) dairy farm. Crop farm requires an initial investment of $2 million while the dairy farm requires $3 million. Crop farm earnings are expected to be 15%, 20%, and 18%, with probabilities of 0.3, 0.4, and 0.3, respectively. In contrast, the expected return from the dairy farm is 10%, 18%, and 25% with the same probability. Calculate the estimated return on investment and the risk associated with both alternatives. From these two options which farm should you establish and why?
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