Suppose that your organization is deciding which of four projects to bid on, as summarized in the following table. Assume that all up-front investments are not recovered, so they are shown as negative profits. Draw a diagram and calculate the EMV for each project. Write a few paragraphs explaining which projects you would bid on. Be sure to use the EMV information and your personal risk tolerance to justify your answer.

Project: Chance of Outcome: Estimated Profits:

Project 1 50 percent 50 percent $120,000 $50,000

Project 2 30 percent 40 percent 30 percent $100,000 $ 50,000 $60,000

Project 3 70 percent 30 percent $ 20,000 $ 5,000

Project 4 30 percent 30 percent 20 percent 20 percent $ 40,000 $ 30,000 $ 20,000 $50,000