Problem:
Tony Truckers has a project that costs $90,000. It has a 50% of paying off $200,000 and a 50% chance of paying off $0.
Required:
Question: What is the expected payoff and expected profit or loss from the new project?
- The expected payoff is $100,000, the expected profit is $10,000
- The expected payoff is $100,000, the expected loss is $10,000
- The expected payoff is $10,000, the expected profit is $10,000
- The expected payoff is $100,000, the expected loss is $100,000
Note: Show all workings.