Wilderness Vacation Resorts,Inc.has a project that costs $400,000.It has a 30% chance of a $1,000,000 payoff and a 70% chance of a $200,000 payoff.What is the expected payoff and the expected profit or loss from the new project?

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The expected payoff is calculated as (0.3 * $1,000,000) + (0.7 * $200,000) = $440,000. The expected profit or loss is the expected payoff minus the project cost: $440,000 - $400,000 = $40,000 gain.