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hello6975
hello6975
19.05.2020 • 
Mathematics

A financial manageress for a company is considering two competing investment proposals. For each of these proposals, she has carried out an analysis in which she has determined various net profit figures and has assigned subjective probabilities to the realization of these returns. For proposal A, her analysis shows net profits of GHȼ 20,000.00, GHȼ 30,000.00 or GHȼ 50,000.00 with respective probabilities 0.2, 0.4 and 0.4. For proposal B, she concludes that there is a 50% chance of successful investment, estimated as producing net profits of GHȼ 100,000.00, and of an unsuccessful investment, estimated as a break – even situation involving GHȼ 0.00 of net profit. Assuming that each proposal requires the same Ghana cedi investment, which of the two proposals is preferable solely from the standpoint of expected monetary return?

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