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Firm X is considering a project and its analysts have projected the following outcomes and their probabilities. 30% chance of Net Income being $4,600; 45% chance of Net Income being $7,800 and 25% chance of Net Income being $13,500. What is the expected value of the outcomes?

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Tundexi

Answer:

$8,265

Explanation:

S/n     Probability      Net Income   Expected Income

1                 30%            $4,600          $1,380

2                45%             $7,800          $3,510

3                25%             $13,500         $3,375

Total          100%                                 $8,265

Note

Expected Income = Probability * Net income

Probability is termed as the branch of mathematics that is concerned with the numerical calculations or the descriptions with a chance for the event to occur. The probability of any of the events carries the number from 0 to 1.

The expected value of outcomes is $8,265

Serial no.     Probability      Net Income   Expected Income

1                 30%                     $4,600          $1,380

2                45%                      $7,800          $3,510

3                25%                       $13,500         $3,375

Total          100%                                             $8,265

The formula to calculate  the expected value of the outcomes is:

  • [tex]\begin{aligned}\text{Expected Income} = \text{Probability} \times\text{ Net income}\end{aligned}[/tex]

To know more about the probability and the expected value of the outcomes, refer to the link below:

https://brainly.com/question/14262217

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