Question 250034: 43. Land Development A developer can buy a piece of property
that will produce a profit of $16,000 with probability
.7, or a loss of $9000 with probability .3. What is the
expected profit?
Answer by stanbon(75887)   (Show Source):
You can put this solution on YOUR website! Land Development
A developer can buy a piece of property that will produce a profit of $16,000 with probability .7, or a loss of $9000 with probability .3.
What is the expected profit?
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Random Variable profit values: 16000 , -9000
Corresponding Probabilities::: 0.7 , 0.3
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E(x) = 0.7*16000 - 0.3*9000 = $8500
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Cheers,
Stan H.
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