Question 628493
Their market research, considering the cost of the new machines and their efficiency, tells them that the switch would give them a 75% chance of making a $20,000 profit, a 20% chance of breaking even, and a 5% chance of losing $5,000. How much money does PuroServ expect to make with their new purchase?
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E(x) = 0.75*20000 + 0.20*0 - 0.05*5000 = $14750
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Cheers,
Stan H.
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