Suppose an investor is concerned about a business choice in which there are three projects, the probability and returns are given below. Probability Return 0.4 $100 0.4 40 The expected value of the uncertain investment is $ ----------- (round off to the nearest dollar.
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Suppose an investor is concerned about a business choice in which there are three projects, the probability and returns are given below.
| Probability | Return | |
| 0.4 | $100 | |
| 0.4 | 40 | |
The expected value of the uncertain investment is $ ----------- (round off to the nearest dollar.
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- Guy Fieri has purchased a significant plot of land in Northwest Ohio for his newest venture: FlavorTownship. This hub for mind-boggling flavor and entertainment is a strictly for-profit operation. Guy would like to keep Flavor Township open all year-round, but due to Ohio weather the following are the probabilities of when it will be open: |- 30% chance it is open 300 days a year |- 55% chance it is open 325 days a year |- 15% chance it is open 350 days a year Flavor Township will expect to host 14,000 people each day that it is open and expects an average revenue of $45 per visitor. This paradigm-shifting landmark will cost $420,000,000 to start the investment and will require annual costs (food, employees, etc.) of $115,000,000. Every 3 years, Flavor Township will undergo necessary maintenance that will cost $22,000,000. If the expected life of Flavor Township is 15 years and a 16% return is expected, what is the expected NPV of this project?1. A person who is 55 year old bought a PHP 2,000,000 life insurance policy at a cost of PHP 1.2 M and has a probability of 0.978 of living to age 56, find the expectation of the policy. 2. nPn-r = ? (Permutations)A man purchased a $22,500, 1-yr term-life insurance policy for $695. Assuming that the probability that he will live for another year is 0.995, find the company's expected gain. (Round your answer to the nearest cent.) $
- Suppose an investor is concerned about a business choice in which there are three prospects; the probability and returns are given below: Probability 0.5 0.3 0.2 The expected value of the uncertain investment is $ dollar.) Return $110 30 - 30 (Round your answer to the nearestQuestion One. The ABC Book Company has a choice of publishing one of two books on the subject of Greek mythology. It expects the sales period for each to be extremely short, and it estimates profit probabilities as follows: Probability 0.2 0.3 0.3 0.2 Book A Profit Class Exercise $2,000 2,300 2,600 : 2,900 Probability 0.1 0.4 0.4 0.1 Book B Profit $1,500 1,700 1,900 2,100 Calculate the expected profit, standard deviation, and coefficient of variation for each of the two books. If you were asked which of the two to publish, what would be your advice?Mr Phiri has K10,000 in his account. He is considering investing in a project which has 70 % probability of earning a profit of K10,000 and a 30% probability of incurring a loss of K10,000. His utility at the moment is 20 utiles with the current K10,000. With K20, 000 his utility would be 25 utiles and with K0 his utility would be zero.a) What is the expected profit of the project? b) What is the expected marginal utility of the project? Is Mr Phiri likely to invest in the project? Mr Sinkala also has K10,000 from which he derives 20 utiles. However, Mr Phiri derives 15 utiles from the profit of K10,000.c) What is the expected marginal utility for Mr Sinkala? d) How can you describe Mr Phiri and Mr Sinkala in terms of their attitude towards risk?
- An investment plan allows investors to deposit a minimum of £1,000 at the beginning of the term, which pays a fixed return rate of 5% per annum. Af- ter a year, investors have to deposit a minimum of £800 with an expected return rate of 3% per annum for the second year and a standard deviation of 2% per annum. a. Find the expected value of the total minimum amount earned after two years of investment. b. Find the standard deviation of the total minimum amount earned after two years of investment.Mr Phiri has K10,000 in his account. He is considering investing in a project which has 70 % probability of earning a profit of K10,000 and a 30% probability of incurring a loss of K10,000. His utility at the moment is 20 utiles with the current K10,000. With K20, 000 his utility would be 25 utiles and with K0 his utility would be zero. a) What is the expected profit of the project? b) What is the expected marginal utility of the project? Is Mr Phiri likely to invest in the project? Mr Sinkala also has K10,000 from which he derives 20 utiles. However, Mr Phiri derives 15 utiles from the profit of K10,000. c) What is the expected marginal utility for Mr Sinkala? d) How can you describe Mr Phiri and Mr Sinkala in terms of their attitude towards risk?Problem 1 Synergy Company sells co-amoxiclav antibiotic. The probability distribution of the demand for co-amoxiclav antibiotic is as follows: Estimated Sales in Units 120 units 210 units 300 units Probability 0.12 0.18 0.22 The estimated demand for co-amoxiclav antibiotics this coming month using the expected value approach is 1. How much is Expected Value? S =
- Consider an investment that pays off $700 or $1,600 per $1,000 invested with equal probability. Suppose you have $1,000 but are willing to borrow to increase your expected return. What would happen to the expected value and standard deviation of the investment if you borrowed an additional $1,000 and invested a total of $2,000? What if you borrowed $2,000 to invest a total of $3,000? Instructions: Fill in the table below to answer the questions above. Enter your responses as whole numbers and enter percentage values as percentages not decimals (.e., 20% not 0.20). Enter a negative sign (-) to indicate a negative number if necessary. Invest $1,000 Invest $2,000 Invest $3,000 Expected Value Percent Increase Standard Deviation 1150 S 28 % $ 8 % $ Expected Return N/A Doubled Tripled : #Tasha is planning to invest in a farming project in 2022, but has a reservation given the different forecast (declined (D),the average (A) and takeoff (T)of the economy. She uses the following to guide her decision making. (i) there is 25% chance she will invest if there is a forecast of declined (ii) there is a 75% chance she will invest if there is a forecast of average growth and (iii) there is a 55% chance of investing if there is a forecast that economy will takeoff. Tashanna believes that for 2022 there is a 20% chance of decline and a 40% chance of average growth and a 40% chance the economy will take off. Based on these probabilities what is the chance that Tattiana will invest in the farming project if the stated forecast hold?Probability Possible Rate of Return 0.25 -0.10 0.15 0.00 0.35 0.10 0.25 0.25 a. Under what conditions can the standard deviation be used to measure the relative risk of two investments? b. Under what conditions must the coefficient of variation (CoVar) be used to measure the relative risk of two investments?
