Question: A company has a project that has three potential outcomes: Outcome A, with a 40% probability, which generates a profit of $50,000 Outcome B, with

A company has a project that has three potential outcomes:

  • Outcome A, with a 40% probability, which generates a profit of $50,000
  • Outcome B, with a 30% probability, which generates a profit of $100,000
  • Outcome C, with a 30% probability, which generates a loss of $25,000

Calculate the expected profit of the project and its standard deviation.

(20 marks)

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