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18 May 2018

The following payoff matrix shows the profit outcomes for threeprojects, A, B, and C, for each of two possible product prices.There is a 60% probability the price will be $10 and a 40%probability the price will be $20.
Profit
Project P = $10 P = $20
A 20 80
B 40 60
C -26 140

a. Using the maximum expected value rule a decision maker wouldchoose project B. Explain.
b. Using the mean variance rule a decision maker would also chooseproject B. Explain Why.

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Nestor Rutherford
Nestor RutherfordLv2
19 May 2018

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