A coffee franchise is opening a new store. The company estimates that there is a 75%...
A coffee franchise is opening a new store. The company estimates that there is a 75% chance the store will have a profit of $45,000 a 55% chance the store will breakeven, and a 20% chance the store will lose $2,500.
Determine the expected gain or loss for this store.
The expected value is
(Round to the nearest cent as needed.)
Homework Answers
I think the chance of breakeven should be 5% and not 55% ?
| x | P(x) | x P(x) |
| 45000 | 0.75 | 33750 |
| 0 | 0.05 | 0 |
| -2500 | 0.2 | -500 |
| ∑ = | 33250 |
Expected value for the store = $33250
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