A company can choose from four mutually exclusive investment projects. The return on the project will depend on market conditions. The table below details the returns for each possible outcome:
A、B
C、D Poor $400,000 $700,000 $450,000 $360,000 Average $470,000 $550,000 $500,000 $400,000 Good $600,000 $300,000 $800,000 $550,000 If the company applies the maximin rule it will invest in:
A、Project
A、B Project
B、C Project
C、D Project D
A、B
C、D Poor $400,000 $700,000 $450,000 $360,000 Average $470,000 $550,000 $500,000 $400,000 Good $600,000 $300,000 $800,000 $550,000 If the company applies the maximin rule it will invest in:
A、Project
A、B Project
B、C Project
C、D Project D
【参考答案及解析】
The correct answer is: Project C. Maximin = maximise the minimum achievable return. The minimum achievable returns for each project are: Project A Project B Project C Project D $400,000 $300,000 $450,000 $360,000 The maximum return from these is $450,000, project C.
The correct answer is: Project C. Maximin = maximise the minimum achievable return. The minimum achievable returns for each project are: Project A Project B Project C Project D $400,000 $300,000 $450,000 $360,000 The maximum return from these is $450,000, project C.