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What Suppose your organization is deciding which of four projects to bid on. Information on each is in the table below. Assume that all up-front investments are not recovered, so they are shown as negative profits. Draw a diagram and calculate the EMV for each project. Write a few paragraphs explaining which projects you would bid on. Be sure to use the EMV information and your personal risk tolerance to justify your answer

What Suppose your organization is deciding which of four projects to bid on. Information on each is in the table below. Assume that all up-front investments are not recovered, so they are shown as negative profits. Draw a diagram and calculate the EMV for each project. Write a few paragraphs explaining which projects you would bid on. Be sure to use the EMV information and your personal risk tolerance to justify your answer

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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 What Suppose your organization is deciding which of four projects to bid on. Information on each is in the table below. Assume that all up-front investments are not recovered, so they are shown as negative profits. Draw a diagram and calculate the EMV for each project. Write a few paragraphs explaining which projects you would bid on. Be sure to use the EMV information and your personal risk tolerance to justify your answer 

 

Project Chance of Outcome Estimated Profits Project 1 50 percent S120,000 50 percent -850,000 Project 2 30 percent 40 percent S100,000 $ 50,000 30 percent -560,000 S 20,000 -8 5,000 Project 3 70 percent 30 percent $ 40,000 S 30,000 $ 20,000 Project 4 30 percent 30 percent 20 percent 20 percent -850,000
Transcribed Image Text:Project Chance of Outcome Estimated Profits Project 1 50 percent S120,000 50 percent -850,000 Project 2 30 percent 40 percent S100,000 $ 50,000 30 percent -560,000 S 20,000 -8 5,000 Project 3 70 percent 30 percent $ 40,000 S 30,000 $ 20,000 Project 4 30 percent 30 percent 20 percent 20 percent -850,000
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