A business has an opportunity to invest $35,000. If the investment is a success, the business earns a profit of $150,000. Otherwise, the investment will result in a total loss of all monies. If the investment has 0.27 chance of success, which equation correctly models the expected value of this investment?

Question

Elliot Matthews

Mathematics

24 February, 05:33

A business has an opportunity to invest $35,000. If the investment is a success, the business earns a profit of $150,000. Otherwise, the investment will result in a total loss of all monies. If the investment has 0.27 chance of success, which equation correctly models the expected value of this investment?

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Nathalia Sandoval · Answer 1

Value

Succes:

Profit = 150000

Investment = 35000

Total income = 150000 + 35000 = 185000

Expected income: 0.27 * 185000 = 49950

Net expected value = expected income - investment = 49950 - 35000 = 14950

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