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A company plans a major investment and theamount of profit is uncertain, but researchersgive the following estimate for the distribution.1.5210Profit(inmillions)Probability0.10.20.40.20.1What is the expected value of the profit?[?] million dollars

A company plans a major investment and theamount of profit is uncertain, but researchersgive-example-1
User Walden Leverich
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2 Answers

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23 votes

Answer:

3

Explanation:

i just know that's the answer lol i just answered that question

User Finuka
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The expected value is the return you expect from some kind of investment/action.

When we are presented with probabilty of an action, we can take the expected value of the whole table [investment] by taking the sum of the products of probability and the action.

Here, we want products of "probability" and "profit". Then we sum it. Shown below:


\begin{gathered} E=(0.1)(1)+(0.2)(1.5)+(0.4)(2)+(0.2)(4)+(0.1)(10) \\ E=3 \end{gathered}

Expected value of profit = 3 million dollars

User Breek
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