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
-------------------------------
E = 0.5*5mil + 0.3*3mil + 0.2*1.5mil - 2.5mil
---------------------------
E = 2.5mil + 0.9mil + 0.3mil - 2.5mil
------
E = $1.2 million
---------------
Cheers,
Stan H.
--------------
|
|
|
