Sawn\'s Sportswear is considering bringing out a line of designer jeans. After m

Question

Sawn's Sportswear is considering bringing out a line of designer jeans. After market research the firm has established the expectations shown in the following table about the annual rates of return. Use the table to calculate the expected value of return for the line. The expected return for the line is %. (Enter as a percentage and round to two decimal places.) (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.) Market acceptance Probability Annual rate of return Very poor 0.09 -0.011 Poor 0.1 0.026 Average 0.51 0.084 Good 0.19 0.122 Excellent 0.05 0.195

Explanation / Answer

Calculation of Expected return :

              = (0.09*-0.011) + (0.16*0.026) + (0.51*0.084) + (0.19*0.122) + (0.05*0.195)

              = - 0.00099 + 0.00416 + 0.04284 + 0.02318 + 0.00975

              = 0.07894

              = 7.894% (in percentage)

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