Question

Under normal conditions (60% probability), Financing Plan A will produce a $30,000 higher return than Plan B. Under tight money conditions (40% probability), Plan A will produce $40,000 less than Plan B. What is the expected value of return

Answer 1

the expected value of return is $2,000

Step-by-step explanation:

The computation of the expected value of return is shown below:

= Given percentage of amount + (given percentage of amount)

= 60% of $30,000 + (40% of -$40,000)

= $18,000 - $16,000

= $2,000

hence, the expected value of return is $2,000

The same should be considered and relevant