Should you invest if this is project under consideration

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Reference no: EM131577424

Suppose you can invest in a project that with a 40% chance brings a revenue stream of $100,000 for one year. With 40% chance it brings no revenues. With 20% it brings a loss of $5000. The investment cost is $35,000 and you are risk neutral.

a. Should you invest if this is the only project under consideration?

b. Does the availability of other projects affect your answer (this is an important question to consider in real life investments)?

Reference no: EM131577424

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