You Can Invest $100,000 into Either Project a or B

question 39

Multiple Choice

You can invest $100,000 into either project A or B.You estimate that A succeeds with probability 0.6 in which case it doubles in value.If it fails,the scrap value is worth $50,000.Project B succeeds with probability 0.7,has value $150,000 if it succeeds and value of $30,000 if not.

• A)You should invest in project A
• B)You should invest in project B
• C)You should not invest in either
• D)You cannot tell from the information presented

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Definitions:

Payment

The amount of money transferred from one party to another in exchange for goods or services.

ROG

Receipt of Goods; the process of receiving and documenting the arrival of goods from a supplier.

Outstanding Balance

The total amount of money that is owed and still payable on a loan, credit card, or other financial accounts.

Invoice

A document itemizing and recording a transaction between a seller and a buyer.