Your company is evaluating two projects for consideration. Project A has a 40% probability of a $3,000.00 loss and a 60% probability of a $20,000.00 gain. Project B has a 30% probability of a $5,000.00 loss and a 70% probability of a $15,000.00 gain. Which of the projects would you select based on the greatest expected monetary value?

We should select Project A as it has a higher expected value of 10,800 compared to Project B's expected value of 9,000.

Explanation:

We need to find the expected value of both the projects, using the formula

Expected value of project A = (probability of loss * value of loss) + (probability of gain * value of gain)

Expected value of project A = (0.40*-3,000) + (0.60*20,000)

=-1200+12,000=10,800

Expected value of project A = 10,800

Expected Value of project B = (probability of loss * value of loss) + (probability of gain * value of gain)

= (0.30*-5,000) + (0.70*15,000) = -1500+10,500=9,000