There is 60% chance of making $12,000, 10% chance of breaking even and 30% chance of losing $6,200. What is the expected value of the purchase?

$5,340

Step-by-step explanation:

Given :

Making a probability distribution :

X : ___12000 0 -6200

P(X) __ 0.6 0.1 0.3

Tge expected value of the purchase si equal to the expected value or average, E(X) :

E(X) = ΣX*p(X)

E(X) = (12000 * 0.6) + (0 * 0.1) + (-6200 * 0.3)

E(X) = 7200 + 0 - 1860

E(X) = $5,340

or

step-by-step explanation:

we need to solve for 'x' the following equation:  

we have that:

⇒

⇒ ⇒

factorizing, we get that:

  ⇒

then, the solutions are: or

nothing extraneous has been found!

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