Ray Crofford Is Evaluating Investment Alternatives for the $100,000 Which

question 59

Multiple Choice

Ray Crofford is evaluating investment alternatives for the $100,000 which he inherited from his grandfather. His investment advisor has identified two alternatives and constructed the following tables which show (1) expected profits (in $10,000's) for various market conditions and their probabilities,and (2) the advisor's track record on predicting Bull and Bear markets. If the advisor predicts a Bull market the EMV of the Stocks alternative,using revised probabilities,is ________.

• A) $168,900
• B) $207,650
• C) $157,300
• D) $306,000
• E) $134,650

---

Definitions:

Units-Of-Production

A depreciation method that allocates cost based on the units produced by an asset over its useful life.

Depreciation Method

A systematic approach used to reduce the carrying amount of a tangible or intangible asset over its useful life.

Level Of Use

Level of use refers to the degree or extent to which a resource, service, or facility is utilized.

Salvage Value

The estimated residual value of an asset at the end of its useful life.