A manager is attempting to assess the probability of a recession ending in the next six months and its impact on expected profitability. The manager believes there is a 33 percent chance the recession will end in six months and profits will return to $100 million. However, there is a 67 percent chance the recession will not end in six months, resulting in a $7 million loss. The expected profits over the next six months are:
$28.31 million.
$33 million.
$64.69 million
−$2.31 million.