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Consider the following three cases 10% Case 1 A company has four legal claims outstanding, each for $116,000. There is a 10% chance that one claim will be paid out, a chance that two will be paid out, a 5% chance for three, and a 5% chance for four payouts Case 2 A company has four legal claims outstanding, each for $116,000 There is a 10% chance that one claim will be paid out, a 60%. chance that two will be paid out, a 5% chance for three, and a 15% chance for four payouts Cese 3 A company has four legal claims outstanding, each for $116,000 There is a 30% chance that one claim will be paid out, a 20% chance that two will be paid out, a 20% chance for three, and a 20% chance for four payouts Required: 1 For each case, decide if some payout is likely or not likely and calculate the expected value Case 1 2 3 Likely or Not Likely? Expected Value

Consider the following three cases 10% Case 1 A company has four legal claims outstanding, each for $116,000. There is a 10% chance that one claim will be paid out, a chance that two will be paid out, a 5% chance for three, and a 5% chance for four payouts Case 2 A company has four legal claims outstanding, each for $116,000 There is a 10% chance that one claim will be paid out, a 60%. chance that two will be paid out, a 5% chance for three, and a 15% chance for four payouts Cese 3 A company has four legal claims outstanding, each for $116,000 There is a 30% chance that one claim will be paid out, a 20% chance that two will be paid out, a 20% chance for three, and a 20% chance for four payouts Required: 1 For each case, decide if some payout is likely or not likely and calculate the expected value Case 1 2 3 Likely or Not Likely? Expected Value

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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ces Consider the following three cases Case 1 A company has four legal claims outstanding, each for $116,000. There is a 10% chance that one claim will be paid out, a 10% chance that two will be paid out, a 5% chance for three, and a 5% chance for four payouts Case 2 A company has four legal claims outstanding, each for $116,000 There is a 10% chance that one claim will be paid out, a 60% chance that two will be paid out, a 5% chance for three, and a 15% chance for four payouts Case 3 A company has four legal claims outstanding, each for $116,000. There is a 30% chance that one claim will be paid out, a 20% chance that two will be paid out, a 20% chance for three, and a 20% chance for four payouts Required: 1 For each case, decide if some payout is likely or not likely and calculate the expected value Case 1 2 3 Likely or Not Likely? Expected Value
Transcribed Image Text:ces Consider the following three cases Case 1 A company has four legal claims outstanding, each for $116,000. There is a 10% chance that one claim will be paid out, a 10% chance that two will be paid out, a 5% chance for three, and a 5% chance for four payouts Case 2 A company has four legal claims outstanding, each for $116,000 There is a 10% chance that one claim will be paid out, a 60% chance that two will be paid out, a 5% chance for three, and a 15% chance for four payouts Case 3 A company has four legal claims outstanding, each for $116,000. There is a 30% chance that one claim will be paid out, a 20% chance that two will be paid out, a 20% chance for three, and a 20% chance for four payouts Required: 1 For each case, decide if some payout is likely or not likely and calculate the expected value Case 1 2 3 Likely or Not Likely? Expected Value
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