EXERCISE A p461
Suppose your organization is deciding which of four projects to bid on.
Information on each is in the table below. Assume that all upfront
investments are not recovered, so they are shown as negative profits.
Draw a diagram and calculate the EMV for each project. Write a few
paragraphs explaining which projects you would bid on. Be sure to use
the EMV information and your personal risk tolerance to justify your
answer. Please complete using Microsoft Excel 2003 or 2007 (do not use
PROJECT CHANCE OF OUTCOME ESTIMATED PROFITS
Project 1 50 percent
50 percent $120,000
Project 2 30 percent
30 percent $100,000
Project 3 70 percent
30 percent $20,000
Project 4 30 percent
20 percent $40,000
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