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Suppose Kim is deciding whether to open a gym or a diner. Her friend Tim, who is a finance expert, advised that there is a 45% chance that the gym will be successful and return a payoff of $55000 and a 55% chance that it will fail and lose $9500. Tim also advised that there is an 80% chance that the diner will be successful with a payoff of $30000 and a 20% chance of failure with a loss of $6000. 13) What is the expected payoff for the gym? a) 18000 b) 16525 c) 19555 d) 19525

Suppose Kim is deciding whether to open a gym or a diner. Her friend Tim, who is a finance expert, advised that there is a 45% chance that the gym will be successful and return a payoff of $55000 and a 55% chance that it will fail and lose $9500. Tim also advised that there is an 80% chance that the diner will be successful with a payoff of $30000 and a 20% chance of failure with a loss of $6000. 13) What is the expected payoff for the gym? a) 18000 b) 16525 c) 19555 d) 19525

Advanced Engineering Mathematics
Advanced Engineering Mathematics
10th Edition
ISBN:9780470458365
Author:Erwin Kreyszig
Publisher:Erwin Kreyszig
Chapter2: Second-order Linear Odes
Section: Chapter Questions
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Suppose Kim is deciding whether to open a gym or a diner. Her friend Tim, who is a finance expert, advised that there is a 45% chance that the gym will be successful and return a payoff of $55000 and a 55% chance that it will fail and lose $9500. Tim also advised that there is an 80% chance that the diner will be successful with a payoff of $30000 and a 20% chance of failure with a loss of $6000. 13) What is the expected payoff for the gym? a) 18000 b) 16525 c) 19555 d) 19525
Transcribed Image Text:Suppose Kim is deciding whether to open a gym or a diner. Her friend Tim, who is a finance expert, advised that there is a 45% chance that the gym will be successful and return a payoff of $55000 and a 55% chance that it will fail and lose $9500. Tim also advised that there is an 80% chance that the diner will be successful with a payoff of $30000 and a 20% chance of failure with a loss of $6000. 13) What is the expected payoff for the gym? a) 18000 b) 16525 c) 19555 d) 19525
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