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A company plans a major investment and the
amount of profit is uncertain, but researchers
give the following estimate for the distribution.
1.5
10

Profit
(in
millions)
Probability

0.1
0.2
0.4
0.2
0.1
What is the expected value of the profit?
[ ? ] million dollars

Respuesta :

semsee45

Answer:

3 million dollars

Step-by-step explanation:

Given probability distribution table:

[tex]\begin{array}{|l|c|c|c|c|c|}\cline{1-6} \text{Profit (in millions)} & 1 & 1.5 & 2 & 4 & 10\\\cline{1-6} \text{Probability} & 0.1 & 0.2 & 0.4 & 0.2 & 0.1\\\cline{1-6}\end{array}[/tex]

Expected Value formula:

[tex]\displaystyle E(x)=\sum x_iP(x_i)[/tex]

where:

  • [tex]x_i[/tex] = all possible values for the random variable
  • [tex]P(x_i)[/tex] = respective theoretical probability

Let x = Profit (in millions)

Use the expected value formula to find the expected value:

[tex]\begin{aligned}E(x) & = 1(0.1)+1.5(0.2)+2(0.4)+4(0.2)+10(0.1)\\& = 0.1 + 0.3+0.8+0.8+1\\& = 3\end{aligned}[/tex]

Therefore, the expected value of the profit is 3 million dollars.

Answer:

3 million dollars

Step-by-step explanation:

jus got it right

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