The Manager's Utility Function for Profit Is U $\pi$ )= 10 Ln

question 51

Multiple Choice

The manager's utility function for profit is U $\pi$ ) = 10 ln $\pi$ ) ,where $\pi$ is the dollar amount of profit.The manager is considering a risky decision with the four possible profit outcomes shown below.The manager makes the following subjective assessments about the probability of each profit outcome: What is the expected profit?

• A)$12,000
• B)$13,000
• C)$14,000
• D)$15,000
• E)none of the above

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Definitions:

AICPA

The American Institute of Certified Public Accountants, a national professional organization for Certified Public Accountants (CPAs) in the United States.

Revenue Recognition

The accounting rule that specifies the exact circumstances in which income is acknowledged or recorded.

Income Statement

A report that outlines a corporation's financial results for a particular accounting period, including income, expenditures, and the net profit or loss.

Investing Activities

Financial transactions related to the acquisition or sale of long-term assets and investments.