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14 November, 15:11

A produceer plans an outdoor regatta for April 28th. The cost of the regatta is $9,000. This includes advertising, security, printing tickets, entertainment, etc. The producer plans to make $15,000 profit if all goes well. However, it it rains, the regatta will be cancelled. According tothe weather report, the probability of rain is 0.35. Find the producer's expected profit.

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  1. 14 November, 15:24
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    expected profit = $6600

    Explanation:

    given data

    cost of the regatta = $9,000

    profit = $15,000

    probability of rain = 0.35

    to find out

    the producer's expected profit

    solution

    we know that expected profit is express as

    expected profit = profit if no rain - loss if rain ... 1

    put here value as here

    expected profit = profit if no rain - loss if rain

    expected profit = (100 - 35 %) * $15000 - 35% * ($9000)

    expected profit = $6600
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