Question: 23
(Choose 1 answer)
(See picture)
A. $33,850
B. $40,750
C. $54,100
D. $47,250
E. None of the other choices is correct
There are two houses with almost identical characteristics
available for investment in two different neighborhoods with
drastically different demographic composition. The
anticipated gain in value when the houses are sold in 10 years
has the following probability distribution:
Returns
Probability Neighborhood A
Neighborhood B
0.25
-$22,500
$30.500
0.40
$10,000
$25,000
0.35
$40,500
$10,500
What is the expected value gain if you invest in both houses?
