Question

ohn is interested in purchasing a multi-office building containing five offices. The current owner provides the following probability distribution indicating the probability that the given number of offices will be leased each year. Number of Lease Offices012345 Probability5/323/163/321/49/321/32 If each yearly lease is $12,000, how much could John expect to collect in yearly leases for the whole building in a given year

Answer 1

$28,875

Explanation:

The given table is:

The expected probability is derived using the formula:
`\sum_(i=0)^(5)x_iP(x_i)`

Therefore, for the given distribution,

Expected Probability

`=(0*(5)/(32))+ (1*(3)/(16))+ (2*(3)/(32))+ (3*(1)/(4))+ (4*(9)/(32))+ (5*(1)/(32))\\=2.40625`

If each yearly lease is $12,000

The Expected Yearly Lease for the Whole Building=2.40625 X 12000

=$28,875