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jeka94
3 years ago
14

A company is considering making a new product. They estimate the probability that the new product will be successful is 0.75. If

it is successful it would generate $240,000 in profit. The cost to develop the product is $196,000. Use the revenue (profit – cost) and expected value to decide whether the company should make this new product.
Mathematics
2 answers:
Doss [256]3 years ago
8 0
<span>You take the probability of success (and the revenue generated by it) and the probability of failure (and the cost associated with trying it) and get an expected value:
 
 aP(a) + bP(b)

I hope my answer has come to your help. God bless and have a nice day ahead!


</span>
k0ka [10]3 years ago
5 0
Hello there.
<span>
A company is considering making a new product. They estimate the probability that the new product will be successful is 0.75. If it is successful it would generate $240,000 in profit. The cost to develop the product is $196,000. Use the revenue (profit – cost) and expected value to decide whether the company should make this new product.</span> 

aP(a) + bP(b)

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