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:

Slave Code

Laws established in the colonial and antebellum South to regulate the lives of enslaved African Americans, dictating virtually every aspect of their lives.

Stephen Douglas

An American politician from Illinois and designer of the Kansas-Nebraska Act, which promoted popular sovereignty allowing settlers to decide if they would allow slavery within their borders.

Southern Democrats

Members of the Democratic Party in the southern United States, historically associated with the defense of slavery pre-Civil War and support for segregation and Jim Crow laws post-Civil War.

1858 Senatorial Campaign

Notable for the series of seven debates between Abraham Lincoln, the Republican candidate, and Stephen A. Douglas, the Democratic nominee, focusing on the issue of slavery in America.