Question 405478: . Essay; show all work. The property restoration company PuroServ is considering switching to new dehumidifiers. Their market research, considering the cost of the new machines and their efficiency, tells them that the switch would give them an 67% chance of making a $20,000 profit, a 3% chance of breaking even, and a 30% chance of losing $5,000. How much money does PuroServ expect to make with their new purchase? (Points : 6)
Answer by stanbon(75887)   (Show Source):
You can put this solution on YOUR website! The property restoration company PuroServ is considering switching to new dehumidifiers. Their market research, considering the cost of the new machines and their efficiency, tells them that the switch would give them an 67% chance of making a $20,000 profit, a 3% chance of breaking even, and a 30% chance of losing $5,000. How much money does PuroServ expect to make with their new purchase?
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Expected Value = ?
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E(x) = 0.67*20000 + 0.03*0 + 0.30*(-5000)
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= 13400 +0 -1500
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= $11,900 dollars
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Cheers,
Stan H.
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