The Graham Telephone Company may invest in new switching equipment. There are three possible outcomes, having net

Question:

The Graham Telephone Company may invest in new switching equipment. There are three possible outcomes, having net present worth of $6570, $8590, and $9730. The probability of each outcome is 0.3, 0.5, and 0.2, respectively. Calculate the expected return and risk associated with this proposal.

Expected Return
The expected return is the profit or loss an investor anticipates on an investment that has known or anticipated rates of return (RoR). It is calculated by multiplying potential outcomes by the chances of them occurring and then totaling these...