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zheka24 [161]
3 years ago
13

As the operations manager for American Airlines you have decided to invest in 10 new jets for the company's fleet. There are thr

ee outcomes for this investment. What is the expected return on investment using the information below?
Business
1 answer:
Tanzania [10]3 years ago
3 0

Answer:

0.17

Explanation:

The computation of expected return in investment is shown below:-

Expected return in investment = (Expected return of outcome 1 × Probability of outcome 1) + (Expected return of outcome 2 × Probability of outcome 2) + (Expected return of outcome 3 × Probability of outcome 3)

= (0.15 × 0.50) + (0.25 × 0.30) + (0.10 × 0.20)

= 0.075 + 0.075 + 0.2

= 0.17

Therefore for computing the expected rate of return we simply applied the above formula.

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