Question

PLEASE HELP ASAP!! CORRECT ANSWER ONLY PLEASE!!! ABC Lumber Company has stock with these probabilities of value after five years with an initial investment of $2,000: 55% probability of a $1,800 value, 20% probability of a $2,100 value, and 25% probability of a $2,700 value. What is the expected value of the investment after five years?

A. $2,085

B. $2,000

C. $1,950

D. $1,545

Answer 1

$2,085

Step-by-step explanation:

(1800 * 0.55) + (2100 * 0.2) + (2700 * .25)

990 + 420 + 675

2085

Answer 2

Answer: $2085

Step-by-step explanation:

The expected value of the investment after five years will be calculated as follows:

= ($1800 × 55%) + ($2100 × 20%) + ($2700 × 25%)

= ($1800 × 0.55) + ($2100 × 0.2) + ($2700 × 0.25)

= $990 + $420 + $675

= $2085

The expected value of the investment after five years is $2085.