Question
Asked Oct 21, 2019
16 views

A construction company has been hired to build a custom home. The builder estimates the probabilities of potential profit (or loss) as shown in the table below. What is the profit expectation for the company?

Profit/Loss Probability
$100,000 0.10
 $60,000 0.35
 $30,000 0.35
          0 0.10
−$20,000 0.08
−$40,000 0.02
check_circle

Expert Answer

star
star
star
star
star
1 Rating
Step 1

Solution:

The profit expectation for the company is obtained below:

The required probability mass function of X is,

help_outline

Image Transcriptionclose

Profit/Loss X $100,000 $60,000 $30,000 Probability P(X -20,000S40,000 0 0.02 0.08 0.10 0.35 0.35 0.10

fullscreen
Step 2

The required value is,...

help_outline

Image Transcriptionclose

E(X) -ΣΡ(X=x) {(100,000)(0.10)+ {(60,000) (0.35)} + {(30,000) (0.35)}+{(0) (0.10)} + {(-20,000) (0.08)} +40,000) (0.02) |10,000+21,000 +10, 500+ 0 + (-1, 600)+ (-800) 39,100

fullscreen

Want to see the full answer?

See Solution

Check out a sample Q&A here.

Want to see this answer and more?

Solutions are written by subject experts who are available 24/7. Questions are typically answered within 1 hour.*

See Solution
*Response times may vary by subject and question.
Tagged in

Math

Statistics

Other

Related Statistics Q&A

Find answers to questions asked by student like you
Show more Q&A
add
question_answer

Q: Will you show me step by step how to answer this

A: It is given that,The probability of child play with computer is 0.12.The probability of child play w...

question_answer

Q: Kurtis is a statistician who claims that the average salary of an employee in the city of Yarmouth i...

A: From the given information, the null and alternative hypotheses are: Null hypothesis: H0: μ ≤ $55,00...

question_answer

Q: Use the TI-84 calculator to find the z-scores that bound the middle 80% of the area under the standa...

A: From the given information, normal distribution middle area is 80%.

question_answer

Q: The correlation between age and height of biological males is .887.  If there are 20 males in the sa...

A: Given dataPearson correlation = 0.887N = 20 Significance level = 0.05Degree of freedom is given by N...

question_answer

Q: I need help understanding how to solve b-d. I'm confused as to how they equal different solutions.

A: b.Here the total number of persons belongs to S1, n(S1) is 194.The total number of persons who belon...

question_answer

Q: The standard deviation is the _____. a.  variance squared b.  square root of the sum of ...

A: The relationship between Standard deviation and variance is given by the following formula.

question_answer

Q: A normal population has a mean of 20 and a standard deviation of 5. Use Appendix B.3 a. Compute the ...

A: a) The z value associated with 24 is 0.80 and it is obtained below: From the given information, a no...

question_answer

Q: A sample selected by taking the members of the population that are easiest to reach is called a ____...

A: Convenience samplingA sample that is made up by people that are easy and very convenient to reach is...

question_answer

Q: A researcher reports an independent-measures t statistic with df = 16. How many participants were in...

A: Consider that there are two groups of participants with sample size n1 and n2, respectively.Hence,To...