ew Roma - A Aa U " atx x x' A - A AaBbCcDo AaBbCCD( AaBbCc AaBbCcC Aab AaBbCcDt AQBbCa Normal No Spac. Heading 1 Heading 2 Font Title Subtitle Subtle En Paragraph Styles A property owner is faced with a choice of: (a) A large-scale investment (A) to improve her flats. This could produce a substantial pay-off in terms of increased revenue net of costs but will require an investment of f1,400,000. After extensive market research it is considered that there is a 40% chance that a pay-off of $2,500,000 will be obtained, but there is a 60% chance that it will be only $800,000. (b) A smaller scale project (B) to re-decorate her premises. At $500,000 this is less costly but will produce a lower pay-off. Research data suggests a 30% chance of a gain of E1,000,000 but a 70% chance of it being only $500,000. To deter mine which investment option is more financially viable, we can calculate the expected monetary value (EMV) for each option. The formula for EMV is: EMV-(P1xVI) (P2xV2)+...+(PnxVn)-Initial Investment 1mark where: English (United Kingdom) LOLC Zm O Search