A risk neutral investor in an uncertain environment is facing the following payoffs and probabilities for an investmentproject:OutcomeStrong economic growthWeak economic growthPr(outcome)0.300.65Payoff$145000$85000Negative economic growth (recession) 0.05What is the most this investor is willing to invest in such a project?The investor would be willing to invest at most $___________$25000(round your answer to the nearest penny)

Maximum willingness to pay for the invest the expected outcome for a risk neutral agent

A risk neutral investor in an uncertain environment is facing the following payoffs and probabilities for an investment project: Outcome Strong economic growth Weak economic growth Pr(outcome) 0.30 0.65 0.05 Payoff $145000 $85000 Negative economic growth (recession) What is the most this investor is willing to invest in such a project? The investor would be willing to invest at most $___________ $25000 (round your answer to the nearest penny)

A risk neutral investor in an uncertain environment is facing the following payoffs and probabilities for an investment project: Outcome Strong economic growth Weak economic growth Pr(outcome) 0.30 0.65 0.05 Payoff $145000 $85000 Negative economic growth (recession) What is the most this investor is willing to invest in such a project? The investor would be willing to invest at most $___________ $25000 (round your answer to the nearest penny)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

A risk neutral investor in an uncertain environment is facing the following payoffs and probabilities for an investment
project:
Outcome
Strong economic growth
Weak economic growth
Pr(outcome)
0.30
0.65
Payoff
$145000
$85000
Negative economic growth (recession) 0.05
What is the most this investor is willing to invest in such a project?
The investor would be willing to invest at most $___________
$25000
(round your answer to the nearest penny)

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