Consider the following three cases 10% Case 1 A company has four legal claims outstanding, each for $116,000. There is a 10% chance that one claim will be paid out, a chance that two will be paid out, a 5% chance for three, and a 5% chance for four payouts Case 2 A company has four legal claims outstanding, each for $116,000 There is a 10% chance that one claim will be paid out, a 60%. chance that two will be paid out, a 5% chance for three, and a 15% chance for four payouts Cese 3 A company has four legal claims outstanding, each for $116,000 There is a 30% chance that one claim will be paid out, a 20% chance that two will be paid out, a 20% chance for three, and a 20% chance for four payouts Required: 1 For each case, decide if some payout is likely or not likely and calculate the expected value Case 1 2 3 Likely or Not Likely? Expected Value
Consider the following three cases 10% Case 1 A company has four legal claims outstanding, each for $116,000. There is a 10% chance that one claim will be paid out, a chance that two will be paid out, a 5% chance for three, and a 5% chance for four payouts Case 2 A company has four legal claims outstanding, each for $116,000 There is a 10% chance that one claim will be paid out, a 60%. chance that two will be paid out, a 5% chance for three, and a 15% chance for four payouts Cese 3 A company has four legal claims outstanding, each for $116,000 There is a 30% chance that one claim will be paid out, a 20% chance that two will be paid out, a 20% chance for three, and a 20% chance for four payouts Required: 1 For each case, decide if some payout is likely or not likely and calculate the expected value Case 1 2 3 Likely or Not Likely? Expected Value
Financial Accounting Intro Concepts Meth/Uses
14th Edition
ISBN:9781285595047
Author:Weil
Publisher:Weil
Chapter4: Balance Sheet: Presenting And Analyzing Resources And Financing
Section: Chapter Questions
Problem 10Q
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Consider the following three cases
Case 1 A company has four legal claims outstanding, each for $116,000. There is a 10% chance that one claim will be paid out, a 10%
chance that two will be paid out, a 5% chance for three, and a 5% chance for four payouts
Case 2 A company has four legal claims outstanding, each for $116,000 There is a 10% chance that one claim will be paid out, a 60%
chance that two will be paid out, a 5% chance for three, and a 15% chance for four payouts
Case 3 A company has four legal claims outstanding, each for $116,000. There is a 30% chance that one claim will be paid out, a 20%
chance that two will be paid out, a 20% chance for three, and a 20% chance for four payouts
Required:
1 For each case, decide if some payout is likely or not likely and calculate the expected value
Case
1
2
3
Likely or Not
Likely?
Expected
Value
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