Problem: Expected Values (Payoff Tables) - QTI Ltd.
Your client, QTI Ltd., wants your advice on which of two alternatives he should choose. One alternativeis to sell an investment now for $10,000. Another alternative is to hold the investment three days, after which he can sell it for a certain selling price based on the following probabilities:
Selling Price
Probability
- $ 5,000
- 0.4
- 8,000 0.2
- 12,000 0.3
- 30,000 0.1
Required: Would you recommend to sell the investment now or hold the investment for three days?