Question

A profit of $50,000 with a probability of 0.6, a profit of $84,000 with a probability of 0.3, and a profit of $10,000 with a probability of 0.1. What is the expected profit?

A) $62,200

B) $69,000

C) $58,400

D) $74,100

Answer 1

To find the expected profit, multiply each profit amount by its corresponding probability and sum up the results.

Step-by-step explanation:

To find the expected profit, we need to multiply each profit amount by its corresponding probability and then sum up the results.

Expected profit = (Profit1 * Probability1) + (Profit2 * Probability2) + (Profit3 * Probability3)

Expected profit = ($50,000 * 0.6) + ($84,000 * 0.3) + ($10,000 * 0.1)

Expected profit = $30,000 + $25,200 + $1,000

Expected profit = $56,200

Therefore, the expected profit is $56,200.