You can invest $100,000 into either project a or b. you estimate that a succeeds with probability 0.7 in which case it doubles in value. if it fails, the scrap value is worth $50,000. project b succeeds with probability 0.6, has value $150,000 if it succeeds and value of $30,000 if not. you should invest in project a you should invest in project b you should not invest in either you cannot tell from the information presented

You should invest in project

Explanation:

We calcualte the expected project value by weigh each outcome with their probability of occurence:

Project A

0.7 x 200,000 = 140,000

0.3 x   50,000 =   15,000

                          155,000

Project B

0.6 x 150,000  =  90,000

0.4 x  30,000  =   12,000

                           102,000

I would invest in project A as the expected value is greater than project B

answer; ///i believe the correct answer is (c) laissez-faire;