Question

A company currently has three active projects: Project A has a 85% chance of a 230,000 USD profit and a 15% chance of a 230,000 USD loss. Project B has a 55% chance of a 900,000 USD profit and a 45% chance of a 900,000 USD loss. Project C has a 73% chance of a 300,000 USD profit and a 27% chance of a 250,000 USD loss. What is the amount of the project with the highest monetary value?

Answer 1

Answer:

Hint 1: Project B has the highest probability of making a loss.

Explanation:

A company currently has three active projects:

Project A has a 85% chance of a 230,000 USD profit and a 15% chance of a 230,000 USD loss.

Project B has a 55% chance of a 900,000 USD profit and a 45% chance of a 900,000 USD loss.

Project C has a 73% chance of a 300,000 USD profit and a 27% chance of a 250,000 USD loss.

What is the amount of the project with the highest monetary value?

Answer 2

Answer: $161,000

Explanation:

Regular math (ROI - Loss) to determine your percent of return

ROI = 85%

Loss = 15%

Total ROI = 85-15=70%

Total ROI * 70% = $161,000

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