Question

The Alliance Corp. expects to sell the following number of units of copper cables at the prices indicated, under three different scenarios in the economy. The probability of each outcome is indicated. Outcome Probability Units Price A 0.50 295 $ 34 B 0.30 510 49 C 0.20 790 59 What is the expected value of the total sales projection?

Answer 1

`E(x) = 21834`

Explanation:

Given

The above data

Required

Determine the expected value E(x)

E(x) is calculated as thus;

`E(x) = \sum xf(x)`

Where f(x) represents the total sale of each outcome;

For A:

`f(x) = 295 *34`

`f(x) = 10030`

For B:

`f(x) =510 *49`

`f(x) =24990`

For C:

`f(x) = 790 *59`

`f(x) = 46610`

Hence, E(x):

`E(x) = 0.5 * 10030 + 0.30 * 24990 + 0.20 * 46610`

`E(x) = 21834`