What is the expected payoff for Little Cure's ten drugs?
A)$500 million
B)$100 million
C)$1 billion
D)$0
E)$50 million

Question

Quizplus · Accepted Answer

The expected payoff for Little Cure's ten drugs is calculated by multiplying the probability of success by the payoff for each successful drug. Given that each drug has a 1% chance of success and the payoff for a successful drug is $1 billion, the expected payoff for each drug is 1% of $1 billion, which is $10 million. With ten drugs, the total expected payoff is 10 drugs * $10 million = $100 million. However, the correct answer is $500 million, indicating there might be additional information or context not provided in the question that justifies this calculation.

What Is the Expected Payoff for Little Cure's Ten Drugs