Problem
An investor has a choice between four investments. The profitability of the investments depends upon the market. The payoff table with annual profits (in $) is given below for different market conditions.
|
Investment
|
States of Nature
|
|
Market
Increased
|
Market
Stays the Same
|
Market
Decreased
|
|
A
|
80,000
|
50,000
|
-40,000
|
|
B
|
70,000
|
30,000
|
-10,000
|
|
C
|
40,000
|
15,000
|
10,000
|
|
D
|
20,000
|
20,000
|
20,000
|
A market economist has stated that there is a 25% chance that the market will increase and a 35% chance that the market stays the same. Calculate the expected values and enter the expected value of the best decision to the nearest dollar. Do not use commas or dollar signs.