You Are Considering Investing in Two Independent Projects "A" and "B

question 20

Multiple Choice

You are considering investing in two independent projects "A" and "B". Project A requires an initial investment of $12,000. In one year, there is a 30% chance of a $10,500 return; a 50% chance of a $12,500 return; and a 20% chance of a $14,500 return. Project B requires an initial investment of $1,000. In one year, there is a 25% chance of a $950 return; a 25% chance of a $1,000 return; and a 50% chance of a $1,200 return. If you require a 7% return on your investment after one year, you should:

• A) Accept A and reject B
• B) Accept B and reject A
• C) Accept both projects
• D) Reject both projects

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Definitions:

Sensory Messages

Information received from the environment through the senses, which is then processed by the brain to form perceptions.

Cerebral Cortex

The outer layer of the brain's cerebrum, involved in complex brain functions such as thought, language, and consciousness.

Statistical Procedures

Mathematical methods used to collect, analyze, interpret, and present data in a meaningful way.

fMRI

Functional Magnetic Resonance Imaging, a neuroimaging procedure that measures brain activity by detecting changes associated with blood flow.