To receive credit you must show the intermediate results. Also note that it is a

Question

To receive credit you must show the intermediate results. Also note that it is an expected value (single) problem, not expected values (plural), so do not neglect the last step of summing the individual factors.

Determine the expected value of a project that has a

10% probability of returning $1,300,

20% probability of returning $900,

30% probability of returning $600,

30% probability of returning $400, and

10% probability of returning $0.

Determine the expected value of a project that has a

20% probability of returning $2,000,

20% probability of returning $1,500,

30% probability of returning $900,

20% probability of returning $500, and

10% probability of returning $0.

Determine the expected value of a project that has a

10% probability of returning $5,000,

20% probability of returning $4,000,

30% probability of returning $3,000, and

40% probability of returning $2,000.

Explanation / Answer

The expected value of project is the sum of probability weighted values.

1)

.1(1300) +.2(900)+.3(600)+.3(400) +.1(0) = $610

2)

.2(2500) +.2(1500)+.3(900)+.2(500) +.1(0) = $1170

3)

.1(5000) +.2(4000)+.3(3000)+.4(2000) $3000

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