Assume the projects are statistically independent of one

Reference no: EM13607922

You are head of risk management for the Norne Corporation. Due to the size of your company, you feel comfortable purchasing interests in highly risky projects. At the moment, you must consider five projects, each with a 1/5 probability of paying off, in which case the profit is 500% (i.e. an investment of $1M yields a collectible payback of $6M). Assume the projects are statistically independent of one another. If you choose to invest $1M in each of the five projects, what is the probability of making money on the five projects as a whole?

Reference no: EM13607922

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