Question: 5. Green Engineering has developed a prototype conversion unit that allows a motorist to switch from gasoline to electric or vice versa. Its marketing

5. Green Engineering has developed a prototype conversion unit that allows a

5. Green Engineering has developed a prototype conversion unit that allows a motorist to switch from gasoline to electric or vice versa. Its marketing group has compiled the potential NPW distribution at (Table below) for each configuration of conversion unit when marketed independently. Evaluate the expected return and risk for each model configuration, and recommend which one, if any, should be selected. (Note: Green Engineering would like to target one configuration model in offering the conversion kit.) NPW Probabilities Model 1 $1,000,000 0.35 $1,500,000 0 $2,000,000 0.40 $2,500,000 0 $3,000,000 0.20 $3,500,000 0 $4,000,000 0.05 $4,500,000 0 Model 2 0.10 0.45 0 0.35 0 0 0 0.10 Model 3 0.40 0 0.25 0 0.20 0 0.15 0 Model 4 0.20 0.40 0 0.30 0 0 0 0.10

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ANSWER TO THIS QUESTION Expected return of model 1 1000000035 15000000 2000000040 25000000 3000000020 35000000 4000000005 45000000 After doing the mul... View full answer

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