If a project pays $1,000 with 40% probability and $0 with 60% probability, what is the expected return on this project?
A) $1,000
B) $600
C) $400
D) None of the above

Name: If a project pays $1,000 with 40% probability and $0 with 60% probability, what is the expected return on this project? A) $1,000 B) $600 C) $400 D) None of the above
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Question

Quizplus · Accepted Answer

The expected return is calculated by multiplying each outcome by its probability and summing the results: (0.4 * $1,000) + (0.6 * $0) = $400.

If a Project Pays $1,000 with 40% Probability and $0