You Are Considering Two Investment Projects Each Having The Same Cost Each Proje

You are considering two investment projects each having the same cost. Each project is facing the following events, probabilities and net profits.

  1. Construct a decision tree and show which project you would choose by using the expected value method
  2. Calculate the coefficient of variation (cov) of each project, and determine which one should be chosen accordingly?
  3. Use the Z-table and show the likelihood the Project 1 and Project 2 will yield a net profit between $7000 and $9000.
  4. Assume that the first investment project will cost your $1000 less than the second one. Show how that change would affect your decision if any.

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