Question: Given the pay-off table below showing the profit (present value OMR), a firm might expect for three alternative factory investments (X, Y, and Z) under

Given the pay-off table below showing the profit (present value OMR), a firm might expect for three alternative factory investments (X, Y, and Z) under different levels of inflation. Economists have assigned probabilities of (15%) , (35%) ,(20%) and (30%) to the possible states of nature A , B, C and D respectively.

States of nature: amount of inflation

A

B

C

D

Build factory X

40

50

70

110

Build factory Y

(25)

45

60

95

Build factory Z

30

40

80

20

The Expected Monetary Value of factory (Y) is:

(Write the number only)

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