Learning Goal: I’m working on a finance case study and need an explanation and answer to help me learn.
Your company is thinking about applying for a government contract. It costs $40,000 to submit. You think you have:A 60% chance of winning the contract, which is worth $100,000 to your company andA 40% chance of failing, which is worth $0 to your company.Download this Excel answer file with this information in it. Use it to answer the following three questions showing your work and then upload your file to answer this question.Part a: For the contract, what is the return, in percentage terms, to each outcome for your company?Part b: For the contract, what is the expected return and standard deviation in returns for submitting the contract?Part c: Suppose you can submit two such contracts. The two contracts are completely independent of each other. What is the overall expected return and standard deviation for the portfolio of investing in both submissions?
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