Question

A coffee franchise is opening a new store. The company estimates that there is an 80% chance the store will have a profit of $100,000, a 10% chance of the store will break even, and a 10% chance of the store will lose $2,500. Determine the expected gain or loss for this store

Answer 1

Answer:

$70,750

Step-by-step explanation:

The expected gain/loss is found by adding the products of all of the profits/losses by their probability. So,

(0.8 * 100000) + (0.1 * 0) + (0.1 * -2500) =

80000 + 0 + -250 =

$70750