SOLUTION: A cellphone company is developing a new phone, but that want to ensure they will be profitable. What is the expected value for the following conditions?
Cost of Development - $2
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Question 1082475: A cellphone company is developing a new phone, but that want to ensure they will be profitable. What is the expected value for the following conditions?
Cost of Development - $2,500,000
Projected sales: 50% chance of net sales of $5,000,000
30% chance of net sales of $3,000,000
20% chance of net sales of $1,500,000
Answer by stanbon(75887) (Show Source): You can put this solution on YOUR website!
A cellphone company is developing a new phone, but that want to ensure they will be profitable. What is the expected value for the following conditions?
Cost of Development - $2,500,000
Projected sales: 50% chance of net sales of $5,000,000
30% chance of net sales of $3,000,000
20% chance of net sales of $1,500,000
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E = 0.5*5mil + 0.3*3mil + 0.2*1.5mil - 2.5mil
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E = 2.5mil + 0.9mil + 0.3mil - 2.5mil
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E = $1.2 million
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Cheers,
Stan H.
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