Simplistic Inc has a project that costs $800,000 It has a 70 chance of a $1,500,000 payoff and a 30 chance of a $50,000 payoff What is the expected payoff and the expected profit or loss from the new project The expected payoff is $600,000, and the expected gain is $0 The expected payoff is $500,000, and the expected loss is $100,000 The expected payoff is $700,000, and the expected loss is $100,000 The expected payoff is $1,065,000, and the expected gain is $265,000

The Answer is in the image, click to view ...

Question: Simplistic Inc. has a project that costs $800,000. It has a 70% chance of a $1,500,000 payoff and a 30% chance of a $50,000 payoff.

Simplistic Inc. has a project that costs $800,000. It has a 70% chance of a $1,500,000 payoff and a 30% chance of a $50,000 payoff. What is the expected payoff and the expected profit or loss from the new project?

		The expected payoff is $600,000, and the expected gain is $0.
		The expected payoff is $500,000, and the expected loss is $100,000.
		The expected payoff is $700,000, and the expected loss is $100,000.
		The expected payoff is $1,065,000, and the expected gain is $265,000.

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Simplistic Inc. has a project that costs $600,000. It has a 70% chance of a $1,000,000 payoff and a 30% chance of a $100,000 payoff. What is the expected payoff and the expected profit or loss from...

Operators share output LO4 After prospecting unsuccessfully for a number of years for gold, in November 2020 Greens Pool Ltd finally found an economically viable deposit. Realising that it did not...

Wilderness Vacation Resorts, Inc. has a project that costs $400,000. It has a 30% chance of a $1,000,000 payoff and a 70% chance of a $200,000 payoff What is the expected payoff and the expected...

Question 1 (10 Marks) Rundu Agro CC sells all sorts of farming equipment to farming community in Rundu. It purchases 50 kg bags of fertilizer X at N$1 150 per bag and sells 800 of these bags every...

MULTIPLE CHOICE: 1. Using the balanced scorecard approach, an organization evaluates managerial performance based on: a. A single ultimate measure of operating results, such as residual income. b....

dont commit my question if you know you will flag for honor code violation Hello can anyone please help me in those derivatives questions. I really cant figure out how to do them Part A A portfolio...

MULTIPLE CHOICE 21. Given demand in excess of capacity, no spoilage or waste, and full use of a constant number of assembly hours, the number of components needed for an assembly operation with an...

1. Calculate the cost of each capital component, after-tax cost of debt, cost of preferred, and cost of equity with the DCF method and CAPM method. 2. What do you estimate the company?s WACC? Please...

Please solve yellow empy spots . answers must be written in formula only Custom 29 CM G K D F Sales Bug For the mos ndng e 30, 2016 6 Nov 2017 72.000 10.00 S 120.000 Dec 2017 13,000 10.00 30 000 Jan...

Media outlets such as ESPN and Fox Sports often have Web sites that provide indepth coverage of news and events. Portions of these Web sites are restricted to members who pay a monthly subscription...

If stock prices follow a random walk, then stock investors can make large profits by Group of answer choices . buying stocks whose prices have been rising for several days. . performing fundamental...

9-3 Which of the following is not an advantage of budgeting? a. It forces managers to plan. b. It provides information for decision-making. c. It guarantees an improvement in organizational...

Add "Viggo Mortenslet cast = new Map ( ) ;en " to the cast as the key, with value "Aragorn".