Alexis Harrington received an inheritance of $95,000, and she is considering two speculative investmentsthe purchase of land and the purchase ofcattle. Each investment would be for 1 year. Under the present (normal) economic conditions, each dollar invested in land will return the principalplus 20% of the principal; each dollar invested in cattle will return the principal plus 30%. However, both investments are relatively risky. If economic conditions were to deteriorate, there is an 18% chance she would lose everything she invested in land and a 30% chance she would loseeverything she invested in cattle. Alexis does not want to lose more than $20,000 (on average). She wants to know how much to invest in eachalternative to maximize the cash value of the investments at the end of 1 year Should all of Alexis's inheritance be invested according to the optimal solution?
Alexis Harrington received an inheritance of $95,000, and she is considering two speculative investmentsthe purchase of land and the purchase of
cattle. Each investment would be for 1 year. Under the present (normal) economic conditions, each dollar invested in land will return the principal
plus 20% of the principal; each dollar invested in cattle will return the principal plus 30%. However, both investments are relatively risky. If economic conditions were to deteriorate, there is an 18% chance she would lose everything she invested in land and a 30% chance she would lose
everything she invested in cattle. Alexis does not want to lose more than $20,000 (on average). She wants to know how much to invest in each
alternative to maximize the cash value of the investments at the end of 1 year Should all of Alexis's inheritance be invested according to the optimal solution?
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