Calculate expected return from each technique for the farmer

Reference no: EM13186047

Suppose a farmer has some money of his own to invest in a better way to cultivate his land. Cultivation can be done using two techniques, both of which require an initial start-up capital of $200. The first technique is risk free and generates a return of 20% while the second technique is new and riskier but generates a return of 50% if successful but nothing if it fails. There is a 60% probability of success using the second technique.

A) Calculate the expected return from each technique for the farmer to determine which technique the farmer will choose to adopt.

Reference no: EM13186047

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