SOLUTION: Is it C? I want to check my answer. Topic: Financial Mathematics ABC Lumber Company has stock with these probabilities of value after five years with an initial investment of

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Question 1180137: Is it C? I want to check my answer.
Topic: Financial Mathematics
ABC Lumber Company has stock with these probabilities of value after five years with an initial investment of $2,000: 55% probability of a $1,800 value, 20% probability of a $2,100 value, and 25% probability of a $2,700 value. What is the expected value of the investment after five years?
A. $2,085
B. $2,000
C. $1,950
D. $1,545
Answer by ikleyn(52776) About Me  (Show Source):
You can put this solution on YOUR website!
.

Your answer is a weighted average:  0.55*1800 + 0.20*2100 + 0.25*2700 = 2085 dollars.

Solved.