28. A company has four mutually exclusive investment opportunities, each one yielding different profits depending on...

Transcribed Image Text:

28. A company has four mutually exclusive investment opportunities, each one yielding different profits depending on the state of the market. There are three possible market states which could arise. The probability of each of these states, together with the incremental profits from each project, are shown in the following pay-off table. Market State Good Average Bad Probability 0.2 0.5 0.3 Investment Opportunity $ 000 $ 000 $000 North 100 80 60 South 120 90 60 80 60 40 60 40 20 East West If the company wishes to maximise expected profits, which one of these projects should be undertaken? A [ ] North B 1 South C I ] East West 28. A company has four mutually exclusive investment opportunities, each one yielding different profits depending on the state of the market. There are three possible market states which could arise. The probability of each of these states, together with the incremental profits from each project, are shown in the following pay-off table. Market State Good Average Bad Probability 0.2 0.5 0.3 Investment Opportunity $ 000 $ 000 $000 North 100 80 60 South 120 90 60 80 60 40 60 40 20 East West If the company wishes to maximise expected profits, which one of these projects should be undertaken? A [ ] North B 1 South C I ] East West