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Return on Investment Probability Project A Project B 0.10 -20% -35% 0.20 -10% 0.25 10% 15% 0.30 15% 25% 0.10 20% 40% 0.05 40% 50%

Return on Investment Probability Project A Project B 0.10 -20% -35% 0.20 -10% 0.25 10% 15% 0.30 15% 25% 0.10 20% 40% 0.05 40% 50%

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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You are considering investing in one of two projects, which have the following returns and probabilities of occurrence:

(a) Compute the mean return for each project.
(b) Compute the variance of return for each project.
(c) Which project would you prefer, and why?

Return on Investment Probability Project A Project B 0.10 -20% -35% 0.20 -10% 0.25 10% 15% 0.30 15% 25% 0.10 20% 40% 0.05 40% 50%
Transcribed Image Text:Return on Investment Probability Project A Project B 0.10 -20% -35% 0.20 -10% 0.25 10% 15% 0.30 15% 25% 0.10 20% 40% 0.05 40% 50%
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