As president and CEO of MegaWorld industries, you must decide on some very risky alternative investments:
Project Profit if Successful Probability of Success Loss if Failure Probability of Failure
A 10 million .5 -6 million .5
B 50 million .2 -4 million .8
C 90 million .1 -10 million .9
D 20 million .8 -50 million .2
E 15 million .4 0 .6
The highest expected return belongs to investment
A) A.
B) B.
C) C.
D) D.
Question 2
Which of the following statements is true regarding the differences between economic and accounting costs?
A) Accounting costs include all implicit and explicit costs.
B) Economic costs include implied costs only.
C) Accountants consider only implicit costs when calculating costs.
D) Accounting costs include only explicit costs.
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