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July 30, 2014

Homework Help: Finance

Posted by Suzy on Monday, November 15, 2010 at 10:27am.

A company is considering a plan that has different profit results under different conditions. Assuming there is a 20% chance of a boom and 10% chance of a recession, compute the expected value of their plan.
Condition Result
Boom $2,000,000 Profit
Average $800,000 Profit
Recession (700,000) Loss

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