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A small company plans to invest in a new advertising campaign. There is a 20% chance that the company will lose $5,000, a 50% chance of a break even, and a 30% chance of a $10,000 profit. Based on this information, what should the company do?

Respuesta :

below is to complete the question above:

Based on this information, should the company build the mousetrap?
A) The expected value is $70,000, so the company should build the mousetrap.
B) The expected value is $85,000, so the company should build the mousetrap.
C) The expected value is $100,000, so the company should build the mousetrap.
D) The expected value is -$70,000, so the company should not build the mousetrap.

The answer is B) The expected value is $85,000, so the company should build the mousetrap. 

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