re capitalist, willing t8 IHVEST $ J00, nas three invest se from. The first investment, a software company, has a 5% chance of returning $5,000,000 profit, a 20% chance of returning $500,000 profit, and a 75% chance of losing the million dollars. The second company, a hardware company, has a 6% chance of returning $4,000,000 profit, a 28% chance of returning $2,500,000 profit, and a 66% chance of losing the million dollars. The third company, a biotech firm, has a 15% chance of returning $6,000,000 profit, a 32% of no profit or loss, and a 53% chance of losing the million dollars. Order the expected values from smallest to largest. O second, third, first first, third, second O second, first, third O third, first, second O third cocond firct

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A venture capitalist, willing to invest $1,000,000, has three investments to choose from. The first
investment, a software company, has a 5% chance of returning $5,000,000 profit, a 20% chance of returning
$500,000 profit, and a 75% chance of losing the million dollars. The second company, a hardware company,
has a 6% chance of returning $4,000,000 profit, a 28% chance of returning $2,500,000 profit, and a 66%
chance of losing the million dollars. The third company, a biotech firm, has a 15% chance of returning
$6,000,000 profit, a 32% of no profit or loss, and a 53% chance of losing the million dollars.
Order the expected values from smallest to largest.
second, third, first
first, third, second
second, first, third
third, first, second
third, second, first
O first, second, third
Transcribed Image Text:A venture capitalist, willing to invest $1,000,000, has three investments to choose from. The first investment, a software company, has a 5% chance of returning $5,000,000 profit, a 20% chance of returning $500,000 profit, and a 75% chance of losing the million dollars. The second company, a hardware company, has a 6% chance of returning $4,000,000 profit, a 28% chance of returning $2,500,000 profit, and a 66% chance of losing the million dollars. The third company, a biotech firm, has a 15% chance of returning $6,000,000 profit, a 32% of no profit or loss, and a 53% chance of losing the million dollars. Order the expected values from smallest to largest. second, third, first first, third, second second, first, third third, first, second third, second, first O first, second, third
Expert Solution
Step 1

Given:

the data given for 3 investments are as shown below

Investment first

Profit Probability
5000000 0.05
500000 0.2
-1000000 0.75

Investment second

Profit Probability
4000000 0.06
2500000 0.28
-1000000 0.66

Investment third

Profit Probability
6000000 0.15
0 0.32
-1000000 0.53
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