IBM IncHas a Project That Costs $150,000

question 56

Multiple Choice

IBM Inc.has a project that costs $150,000.It has a 50% chance of paying off $300,000 and a 50% chance of paying off $50,000.What is the expected payoff and the expected profit or loss from the new project?

• A)The expected payoff is $175,000 and the expected profit is $25,000.
• B)The expected payoff is $25,000 and the expected profit is $25,000.
• C)The expected payoff is $175,000 and the expected loss is $175,000.
• D)The expected payoff is $100,000 and the expected loss is $10,000.

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Definitions:

Convention Centers

Large facilities designed to host conferences, exhibitions, and large events, often featuring a variety of spaces including auditoriums, exhibit halls, and meeting rooms.

Cash-Basis Taxpayer

A Cash-Basis Taxpayer is an individual or business that reports income and deductions in the year that they are actually received or paid, as opposed to when they are earned or incurred.

Accrual Basis

Accrual basis accounting is an accounting method where revenue and expenses are recorded when they are earned or incurred, regardless of when the cash is actually received or paid.

Unemployment Compensation

Financial payments made to individuals who are unemployed through no fault of their own, intended to provide temporary financial assistance.