Order the answer to: You are considering a $500,000 investment in the fast-food indus

Assignment Help business-economics Order the answer to: You are considering a $500,000 investment in the fast-food indus

business-economics

Order the answer to: You are considering a $500,000 investment in the fast-food indus

Question You are considering a $500,000 investment in the fast-food industry and have narrowed your choice to either a McDonald’s or a Penn Station East Coast Subs franchise. McDonald’s indicates that, based on the location where you are proposing to open a new restaurant, there is a 25 percent probability that aggregate 10-year profits (net of the initial investment) will be $10 million, a 50 percent probability that profits will be $5 million, and a 25 percent probability that profits will be – $1 million. The aggregate 10-year profit projections (net of the initial investment) for a Penn Station East Coast Subs franchise is $30 million with a 2.5 percent probability, $5 million with a 95 percent probability, and – $30 million with a 2.5 percent probability. Considering both the risk and expected profitability of these two investment opportunities, which is the better investment? Explain carefully.
Subject business-economics
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