1. A public project has the folowing possible outcomes and their probabilities:

Question

1. A public project has the folowing possible outcomes and their probabilities:

Probabilities                       Possible Outcomes

0.04                                                0

0.36                                                1

0.50                                                2

0.08                                                3

0.02                                                4

a. Calculate the degree of risk associated with the range of possible outcomes.

b. Based on your calculations explain whether this project will be beneficial to the community.

*****Please show work ( so I can undertand what was done)

Explanation / Answer

a)degree of risk is (4- mean probable outcome)/4=4- .04*0-.36*1-.5*2-.08*3-.02*4=2.32/4=0.58

asdegree of risk is greater than 0.5 thus it will not be beneficial to community

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