A business evaluates a proposed venture as follows. It standsto make a profit of

Question

A business evaluates a proposed venture as follows. It standsto make a profit of $10,000 with probability 3/20, to make a profitof $5,000 with probability 9/20, to break even with probability of1/4, and to lose $5,000 with probability 3/20. The expected profitin dollars is: a) 1,500 b)0 c)3,000 d)3,250 e)-1,500 A business evaluates a proposed venture as follows. It standsto make a profit of $10,000 with probability 3/20, to make a profitof $5,000 with probability 9/20, to break even with probability of1/4, and to lose $5,000 with probability 3/20. The expected profitin dollars is: a) 1,500 b)0 c)3,000 d)3,250 e)-1,500

Explanation / Answer

E(X)=10000*(3/20)+5000*(9/20)+0*(1/4) - 5000*(3/20) = 3,000 Answer: c

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