SOLUTION: An airline is considering adding a route to the city of New Orleans, Louisiana. Market research predicts that if the airline serves New Orleans, there is a 42% probability of makin

Algebra ->  Probability-and-statistics -> SOLUTION: An airline is considering adding a route to the city of New Orleans, Louisiana. Market research predicts that if the airline serves New Orleans, there is a 42% probability of makin      Log On


   

Question 971073: An airline is considering adding a route to the city of New Orleans, Louisiana. Market research predicts that if the airline serves New Orleans, there is a 42% probability of making a $700,000 profit, a 22% probability of
breaking even, and a 36% probability of losing $1,000,000. What is the expected value of adding a route to New Orleans?
Answer by Boreal(15235) About Me  (Show Source):
You can put this solution on YOUR website!
E(x)=0.42 * $700,000 + 0.22 * 0 + 0.36* $1,000,000
=294,000-360,000=
= - $66,000