You are a hotel manager and you are considering four projects that yield different payoffs, depending upon whether there is an economic boom or a recession. The potential payoffs and corresponding payoffs are summarized in the following table. Which project yields the greatest return, regardless of whether a boom or a recession occurs?

Question

You are a hotel manager and you are considering four projects that yield different payoffs, depending upon whether there is an economic boom or a recession. The potential payoffs and corresponding payoffs are summarized in the following table.  Which project yields the greatest return, regardless of whether a boom or a recession occurs?

Quizplus · Accepted Answer

Project D yields the highest potential payoff of $120,000, regardless of whether there is a boom or a recession. The other projects have higher payoffs in a boom but much lower payoffs in a recession. Project D has a consistent high level of potential payoff.

You Are a Hotel Manager and You Are Considering Four