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King, Inc., a successful Midwest firm, is considering opening a branch office on the west coast. Under normal economic conditions, with a 45% probability of occurring, King can expect to earn a net income of $54,000 per year. In a mini-recession, at 25% probability, King will earn $22,000. In a severe recession, at a 20% probability, King will lose $17,000. There is also a slight probability (10%) that King will lose $209,000 if the expansion fails and the branch office must be closed.

What is the expected profit of the new branch?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92775921

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