Question: You are considering two investment projects each having the same cost. Each project is facing the following events, probabilities and net profits: ALTERNATIVES: a 1

You are considering two investment projects each having the same cost. Each project is facing the following events, probabilities and net profits:

ALTERNATIVES: a₁:Newspaper a₂: Pamphlet

EVENTS: e₁e₂e₃e₁e₂e₃

NET PROFITS: 4000 6000 9000 3000 7000 8000

PROBABILITIE: .25 .50 .25 .30 .50 .20

1. Construct a decision tree and show which project you would choose by using the expected value method?

2. Calculate the coefficient of variation of each project, and determine which one should you chose accordingly?

3. Use the Z-table, and show the likelihood that Project and Project 2 will yield a net profit between $7000 and $9000.

4. Assume that the first investment project will cost you $2000 less than the second one. Support how that would change your decision, if at all. PLEASE SHOW ALL WORK THANK YOU!

DMUR: Results

	Xbar	Sigma	CoV	Normal Dist. %
A
B
C
Be Sure	To Support	Your	Answers	(Give Reasons!)

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