Answer (A) is correct . When monetary outcomes and probabilities can be reasonably estimated, a payoff table can be constructed to determine the best course of action: Alternative #1 Alternative #2 Expected Expected Probability Payoffs Value Probability Payoffs Value
Answer (B) is incorrect because The expected value of Alternative #2 is only $102,500.
Answer (C) is incorrect because The expected value of Alternative #3 is only $97,500.
Answer (D) is incorrect because The expected value of Alternative #4 is only $80,000.
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