Present value of net benefits

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Reference no: EM13859535

Supposed a proposed public policy could result in three possible outcomes:

1. Present value of net benefits of $4,000,000;

2. Present value of net benefits of $1,000,000;

3. Present value of net benefits of -$10,000,000 (yes, it is a loss).

If the probability of each outcome is, respectively, 0.85, 0.10, and 0.05, should the policy be pursued or not? Explain.

Reference no: EM13859535

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