document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=215035>Question 215035</A>: <I><SPAN STYLE=\"word-break: break-all;\"> As a birthday gift, you are mailing a new personal digital assistant (PDA) to your cousin in Toledo.<BR>\n" );
document.write( "The PDA cost $250. There is a 2 percent chance it will be lost or damaged in the mail. Is it worth<BR>\n" );
document.write( "$4 to insure the mailing? Explain, using the concept of expected value.<BR>\n" );
document.write( " </SPAN>\n" );
document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #162569 by </B><A HREF=/tutors/aboutme.mpl?userid=stanbon><B>stanbon(75887)</B></A><img src=\"/images/stars/stars-13.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=stanbon><IMG SRC=http://www.algebra.com/images/aboutme-small.gif BORDER=0 alt=\"About Me\" VALIGN=MIDDLE></A>&nbsp;<IMG SRC=http://www.algebra.com/images/nopicture.jpg><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=162569\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> As a birthday gift, you are mailing a new personal digital assistant (PDA) to your cousin in Toledo.<BR>\n" );
document.write( "The PDA cost $250. There is a 2 percent chance it will be lost or damaged in the mail. Is it worth<BR>\n" );
document.write( "$4 to insure the mailing? Explain, using the concept of expected value.<BR>\n" );
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document.write( "Let the random variable values represent your money balance.<BR>\n" );
document.write( "X = 250-4 = 246 and -250<BR>\n" );
document.write( "Corresponding probabilities are 0.98 and 0.02<BR>\n" );
document.write( "Your Expected Value is 0.98(246) + (0.02)(-250) = $236<BR>\n" );
document.write( "--------------<BR>\n" );
document.write( "It is worth it to insure the mailing.<BR>\n" );
document.write( "Cheers,<BR>\n" );
document.write( "Stan H. </SPAN>\n" );
document.write( "</TD></TR></TABLE>\n" );