Question

A construction company plans to invest in a housing project. There is a 30% chance that the company will lose $236,016, a 30% chance it will lose $148,803, and a 40% chance of a $440,171 profit. Based ONLY on this information, how much can the company expect to gain or lose. Round to the nearest hundredth, gains should be positive and losses negative."

A) $49,374.90
B) $28,997.50
C) $58,176.30
D) $37,211.60

Answer 1

The company can expect to gain $60,622 in the housing project.

Step-by-step explanation:

To calculate the expected gain or loss, we can multiply the probabilities of each outcome by their respective values and sum them up.

For the housing project:

The expected gain or loss = (30% * (-$236,016)) + (30% * (-$148,803)) + (40% * $440,171) = -$70,804.80 + (-$44,641.20) + $176,068.40 = -$70,804.80 - $44,641.20 + $176,068.40 = $60,622

Therefore, the company can expect to gain $60,622 in the housing project.