keebler01
The property restoration company PuroServ is considering switching to new dehumidifiers. 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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coolaid
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dont worry
coolaid
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some ons coming
coolaid
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:D
Ishaan94
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keebler I am sorry but I never did a question like this.
I will try to get some help.
dumbcow
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its expected value, kind of like a weighted average
\[EV = \sum_{}^{}x*p(x)\]
where x is profit made and p(x) is the probability of making that profit
keebler01
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dumbcow i dont get it!!
dumbcow
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so
(20,000)(0.75) + (0)(0.2) + (-5000)(0.05)
dumbcow
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multiply each probability by its corresponding profit
Hashir
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:D
Hashir
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it is easy
keebler01
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thank u dumbcow
dumbcow
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no problem
what do you get after adding them up
keebler01
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hold on!
keebler01
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it gave me a wired number!
dumbcow
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hmm
should be 14,750
.75*20,000 - .05*5000