PLEASE HELP! WILL GIVE BRAINLIEST! Claire is considering investing in a new business. In the first year, there is a probability of 0.2 that the new business will lose $10,000, a probability of 0.4 that the new business will break even ($0 loss or gain), a probability of 0.3 that the new business will make $5,000 in profits, and a probability of 0.1 that the new business will make $8,000 in profits. a. Claire should invest in the company if she makes a profit. Should she invest? Explain using expected values. b. If Claire’s initial investment is $1,200 and the expected value for the new business stays constant, how many years will it take for her to earn back her initial investment?
Accepted Solution
A:
Part A:Claire should not invest in the company because there's a higher chance of her to break even with her money(40 percent) and to lose 10000 (20 Percent) than there is to gain money. Hoped this helped.