A manager is attempting to assess the probability of a recession ending in the next six months and its impact on expected profitability. The manager believes there is a 33 percent chance the recession will end in six months and profits will return to $100 million. However, there is a 67 percent chance the recession will not end in six months, resulting in a $7 million loss. The expected profits over the next six months are:
A. $33 million.
B. $28.31 million.
C. ?$2.31 million.
D. $64.69 million.
Answer: B
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