SOLUTION: EMIZ Corporation is contemplating on building a hypermarket in two different location and had asked you to help the company in the investment endeavor. The company�s development an

Question 1102200: EMIZ Corporation is contemplating on building a hypermarket in two different location and had asked you to help the company in the investment endeavor. The company�s development and market research teams provide you with the following projections.
Hyper Market in Location A: 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
Hyper Market in Location B: Cost of development: $1,500,000
Projected sales: 30% chance of net sales of $4,000,000
60% chance of net sales of $2,000,000
10% chance of net sales of $500,000
a) Let X be the random variable for the net sales of the hyper market. Construct a probability distribution table of X for both location A and B and calculate the expected value for each location.
(12 marks)
b) Which Hyper Market Location should the company build? Explain your answer.
I don't know how to solve these question. Thank you for helping.

Answer by Boreal(15235) (Show Source): You can put this solution on YOUR website!
=======x=========p(x)=====x*p(x)
5,000,000==========0.50=====2,500,000
3,000,000==========0.30=======900,000
1,500,000==========0.20=======300,000
-2,500,000=========1.00======-2,500,000
E(x)=+$1,200,000

second
-1,500,000========1.00=======-1,500,000
4,000,000=========0.30========1,200,000
2,000,000=========0.60========1,200,000
500,000===========0.10===========50,000
E(x)=+$950,000
Multiply x*p(x), with expenses - and revenues + and add everthing.
Market A is better E(x).
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