SOLUTION: Company has a contract to sell 10,000 parts. Each part will sell for $45.50 apiece. There is a 20% probability that expeses will be $40,000 and an 80% probability that expenses w

SOLUTION: Company has a contract to sell 10,000 parts. Each part will sell for $45.50 apiece. There is a 20% probability that expeses will be $40,000 and an 80% probability that expenses w

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Question 254921: Company has a contract to sell 10,000 parts. Each part will sell for $45.50 apiece. There is a 20% probability that expeses will be $40,000 and an 80% probability that expenses will be $50,000. What is the expected pretax income for the firm's sales?
Answer by edjones(8007) (Show Source): You can put this solution on YOUR website!
10000*45.50=455,000 gross income
.2*40000 + .8*50000=48,000
455000-48000=$407,000.
.
Ed
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