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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?
please show work
 2 years ago
 2 years ago
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? please show work
 2 years ago
 2 years ago

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Ishaan94Best ResponseYou've already chosen the best response.1
keebler I am sorry but I never did a question like this. I will try to get some help.
 2 years ago

dumbcowBest ResponseYou've already chosen the best response.3
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
 2 years ago

keebler01Best ResponseYou've already chosen the best response.0
dumbcow i dont get it!!
 2 years ago

dumbcowBest ResponseYou've already chosen the best response.3
so (20,000)(0.75) + (0)(0.2) + (5000)(0.05)
 2 years ago

dumbcowBest ResponseYou've already chosen the best response.3
multiply each probability by its corresponding profit
 2 years ago

dumbcowBest ResponseYou've already chosen the best response.3
no problem what do you get after adding them up
 2 years ago

keebler01Best ResponseYou've already chosen the best response.0
it gave me a wired number!
 2 years ago

dumbcowBest ResponseYou've already chosen the best response.3
hmm should be 14,750 .75*20,000  .05*5000
 2 years ago
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