Question

Over a 5-year period, a company reported annual profits of $8 million, $3 million, $2 million, and $9 million. In the fifth year, it reported a loss of $7 million. What was the mean annual profit?

Answer 1

Given

Annual profits of four years $8 million, $3 million, $2 million, and $9 million.

In the fifth year, it reported a loss of $7 million.

To find:

The mean annual profit.

Solution:

Formula for mean is:

`\text{Mean}=\frac{\text{Sum of observations}}{\text{Number of observations}}`

Annual profits are $8 million, $3 million, $2 million, $9 million and -$7 million. Here negative sign represent loss.

So, the mean annual profit is:

`\text{Mean}=(8+3+2+9+(-7))/(5)`

`\text{Mean}=(22-7)/(5)`

`\text{Mean}=(15)/(5)`

`\text{Mean}=3`

Therefore, the mean annual profit is $3 million.