Question:
Suppose your organization is deciding which of four projects to bid on. Information on each is in the table below. Assume that all up-front investments are not recovered, so they are shown as negative profits. Draw a diagram and calculate the EMV for each project. Write a few paragraphs explaining which projects you would bid on. Be sure to use the EMV information and your personal risk tolerance to justify youranswer.
Transcribed Image Text:
Project Chance of Outcome Estimated Profits Project 1 50 percent 50 pervent $120,000 -850,000 Project 2 30 percent 40 percent 30 percent $100,000 8 50,000 -860,000 s 20,000 -8 5,000 Project 3 70 pereent 30 percent Project 4 30 pereent 30 percent 20 percent 20 percent 8 40,000 8 30,000 s 20,000 -$50,000