To receive credit you must show the intermediate results. Also note that it is a
ID: 3011151 • Letter: T
Question
To receive credit you must show the intermediate results. Also note that it is an expected value (single) problem, not expected values (plural), so do not neglect the last step of summing the individual factors.
Determine the expected value of a project that has a
10% probability of returning $1,300,
20% probability of returning $900,
30% probability of returning $600,
30% probability of returning $400, and
10% probability of returning $0.
Determine the expected value of a project that has a
20% probability of returning $2,000,
20% probability of returning $1,500,
30% probability of returning $900,
20% probability of returning $500, and
10% probability of returning $0.
Determine the expected value of a project that has a
10% probability of returning $5,000,
20% probability of returning $4,000,
30% probability of returning $3,000, and
40% probability of returning $2,000.
Explanation / Answer
The expected value of project is the sum of probability weighted values.
1)
.1(1300) +.2(900)+.3(600)+.3(400) +.1(0) = $610
2)
.2(2500) +.2(1500)+.3(900)+.2(500) +.1(0) = $1170
3)
.1(5000) +.2(4000)+.3(3000)+.4(2000) $3000