Answers CREDIT RE-SEAT MNPS Integrated Math III IC S2 26-27 Expected ValueQuestion 14

14

AssignmentMultiple Select

Expected Value

Question 14 • CREDIT RE-SEAT MNPS Integrated Math III IC S2 26-27

Which of the following did your solution include?

Answer

A

P = $240,000 – $196,000 = $44,000.

B

The expected value is a weighted average of each possible value weighted by its probability.

C

EV = ($44,000)(0.75) + ($–196,000)(0.25) = $–16,000.

D

The expect average profit is $–16,000.

E

The company should not make the product.

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