Fill This Form To Receive Instant Help

Help in Homework
trustpilot ratings
google ratings


Homework answers / question archive / You are considering an investment project

You are considering an investment project

Statistics

You are considering an investment project. Phase 1 requires $100,000 outlay, and will produce either $120,000 or $80,000 with equal probabilities.  Once phase 1 is complete, you have the option to invest another $100,000 in phase 2.  At the completion of phase 2, the payout will either be 20% higher than the phase 1 payout, or 10% less, also with equal probabilities.  You may choose to a) not invest; b) invest in phase 1 and then decide later about phase 2; or c) commit to both phases today.
 
What is the best policy?
How much would you pay to know the phase 1 outcome if option b) were removed?

Purchase A New Answer

Custom new solution created by our subject matter experts

GET A QUOTE

Related Questions