Modigliani and Associates Has Forecasted the Following Payoffs from a Project

question 10

Multiple Choice

Modigliani and Associates has forecasted the following payoffs from a project:
$$\begin{array}{l}\begin{array} { r c l } &\text { Probability of }\\\text { Outcome } & \text { Outcome } & &\text { Assumption: }\\\$0 & 20 \% & \text { pessirmstic } \\\$3,500 & 60 \% & \text { moderately successful } \\\$6,000 & 20 \% & \text { optimistic }\end{array}\end{array}$$
What is the expected value of the outcomes?

• A) $0
• B) $3,300
• C) $3,700
• D) Cannot be determined. Depends upon which prediction is correct.

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