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Tony has $ 5 0 0 0 that he wants to invest. He is considering putting the money into the bank for one year at
Tony has $ that he wants to invest. He is considering putting the money into the bank for one year at APY. With this very safe investment, Tony will earn $ in interest and get to keep his original deposit, of course At the same time, Tony's friend Brandi approaches him about investing in her business idea. She thinks that she can triple Tony's investment within one year, but her business plan is risky. Tony thinks that she has a chance of tripling his money and a chance of losing all his money.
In other words:
P$ profit
P$ loss
Please complete the following parts.
Part A: Determine the expected value of the investment in Brandi's company.
Part B: Determine the expected value of putting the money in the bank.
Part C: What would you do if you were in Tony's position? Feel free to comment on your personal risk tolerance.
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