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There is an investment. It can bring you $200 in good situations and $50 in bad situations. The probability of good situations is 0.4, and

There is an investment. It can bring you $200 in good situations and $50 in bad situations. The probability of good situations is 0.4, and the probability of bad situations is 0.6. The cost of the investment is $80. Try to complete the following table. And will you refuse this investment or not? Why?


Not do
Do

GOOD
BAD
GOOD
BAD
Present Earnings
200
150
200
150
Investment: earnings
0
0
200
50
Total earnings




Debt
100
100
100
150
Equity




V(D)


V(E)



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