Mark is working to create the "metaverse". He has already spent $4 billion on fixed costs. With 30% probability, the metaverse will be a big success, in which case he can choose whether to spend $4 billion on engineering to earn revenues of $24 billion. (If he chooses not to spend all of that amount of engineering, then his revenue from the metaverse will be $0.) With 70% probability, the metaverse will not be popular, in which case Mark will choose whether to spend $4 billion on engineering in order to receive $3 billion in revenue. Assuming that Mark maximizes profit, what is the expected value of his metaverse project? 

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To calculate the expected value of Marks metaverse project we need to assess the potential outcomes ... View the full answer