You are considering two investment opportunities. for investment a there is a 25% chance that you lose $20,000, a 50% chance that you break even, and a 25% chance that you make $80,000. for investment b there is a 30% chance that you lose $50,000, a 50% chance that you break even, and a 20% chance that you make $180,000. based on the expected value of each, which investment should you make?

a 15000 !!! i just took the question

b 21000

you should make investment B

Step-by-step explanation:

The expected value of a discrete variable is calculated as:

Where are the possible values for the variable and   are their respective probabilities.

Then, the expected value for investment A is:

E(A) = -20,000(0.25) + 0(0.5) + 80,000(0.25) = $15,000

Because, you can lose $20,000 with a probability of 0.25, you can break even with a probability of 0.5 or you can win $80,000 with a probability of 0.25.

At the same way, the expected value for investment B is:

E(B) = -50,000(0.3) + 0(0.5) + 180,000(0.2) = $21,000

Then, you should make investment B because the expected value for investment B is bigger than the expected value for investment A.

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step-by-step explanation:

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