Assume you can invest in 2 projects whose payoff depend on the state of the economy. The profits from each project for each state of the economy are presented below. What are the expected payoffs of each project if there is a 30% chance of a recession and a 70% of no recession? Profit under recession Profit under normal conditions Project 1 100,000 150,000 Project 2 50,000 240,000 O Project 1: $130,000 and Project 2: $180,000 O Project 1: $135,000 and Project 2: $183,000 O Project 1: $135,000 and Project 2: $180,000 O Project 1: $130,000 and Project 2: $183,000

Assume you can invest in 2 projects whose payoff depend on the state of the economy. The profits from each project for each state of the economy are presented below. What are the expected payoffs of each project if there is a 30% chance of a recession and a 70% of no recession? Profit under recession Profit under normal conditions Project 1 100,000 150,000 Project 2 50,000 240,000 O Project 1: $130,000 and Project 2: $180,000 O Project 1: $135,000 and Project 2: $183,000 O Project 1: $135,000 and Project 2: $180,000 O Project 1: $130,000 and Project 2: $183,000

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

Assume you can invest in 2 projects whose payoff depend on the state of the economy. The profits from each project for each state of
the economy are presented below. What are the expected payoffs of each project if there is a 30% chance of a recession and a 70% of
no recession?
Profit under recession
Profit under normal conditions
Project 1
|100,000
150,000
Project 2
50,000
240,000
Project 1: $130,000 and Project 2: $180,000
O Project 1: $135,000 and Project 2: $183,000
O Project 1: $135,000 and Project 2: $180,000
O Project 1: $130,000 and Project 2: $183,000

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