Answer:
$300
Explanation:
Given:
Investment opportunity = $250
Total possible outcomes = 2
Payoff yield of first outcome = $100
probability of first outcome = 0.25
Computation:
Probability of all outcomes = 1
Probability of second outcome = 1 - probability of first outcome
= 1 - 0.25
= 0.75
Payoff yield of second outcome = (Payoff yield of first outcome x Probability of second outcome) / Probability of first outcome
= ($100 x 0.75) / 0.25
= $300
