An Investor Is Considering a $25,000 Investment in a Start-Up

Multiple Choice

An investor is considering a $25,000 investment in a start-up company. She estimates that she has probability 0.15 of a $20,000 loss, probability 0.1 of a $30,000 profit, probability 0.25 of a $40,000 Profit, and probability 0.5 of breaking even (a profit of $0) . What is the expected value of the profit?

A) $22,500
B) $10,000
C) $16,000
D) $16,667