Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

I am needing help calculating: * Expected profit for pipeline * Variance for pipeline * Expected profit for alternative investment * Variance for alternate investment

I am needing help calculating:

* Expected profit for pipeline

* Variance for pipeline

* Expected profit for alternative investment

* Variance for alternate investment

I left out some info that I used.

Assume there is a 10% probability of the pipeline leaking, with an expected liability of $3.2 billion which will be deducted from total profit. There is a 90% probability the pipeline will not leak. Determine the expected return on this investment, as well as the variance.

The firm also has an alternative investment which will yield $1.6 billion over the course of the same 15-year period, with a probability of 80%, or $1.15 billion with a probability of 20%. Calculate the expected return, as well as the variance. The risk should be expressed as the standard deviation.

I would appreciate any help!

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Finance questions