A construction company is considering a new project that has a 40% chance of making a profit of $300,000, a 50% chance of breaking even, and a 10% chance of losing $200,000. The company has an opportunity to purchase insurance that will cover the potential loss of $200,000 at a cost of $40,000. Should the company purchase the insurance? What is the expected value and standard deviation of the project with and without insurance?

Answer rating: 100% (QA)

The detailed answer for the above question is provided below Without insurance the expected value of ... View the full answer