There Are Three Equally Likely States of Nature (High,Medium,and Low

question 53

Multiple Choice

There are three equally likely states of nature (High,Medium,and Low demand) .If the large factory will post profits of $50,000,$25,000,and - $10,000 under these states of nature,respectively,what is the EMV of the factory?

• A)$50,000
• B)$25,000
• C)$28,333.33
• D)$21,666.67
• E)$65,000

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Definitions:

Estimated Average

A calculation that aims to determine the central or typical value of a data set or projection.

Average Rate

A calculation representing the central or typical value in a set of rates, or a fixed rate determined as an average from several rates.

Capital Investment

Funds spent by a company to acquire or upgrade physical assets such as property, industrial buildings, or equipment.

Annual Income

The total amount of money earned by an individual or business in one year from all sources, before taxes.