2 Your company has a customer who is shutting down a production line, and it is your responsibility to dispose of the extrusion machine. The companycould keep it in inventory for a possible future product and estimates that the reservation value is $300,000. Your dealings on the secondhand marketlead you to believe that if you commit to a price of $350,000, there is a 0.5 chance you will be able to sell the machine. If you commit to a price of$400,000, there is a 0.3 chance you will be able to sell the machine. If you commit to a price of $450,000, there is a 0.1 chance you will be able tosell the machine. These probabilities are summarized in the following table.For each posted price, enter the expected value of attempting to sell the machine at that price. (Hint: Be sure to take into account the value of themachine to your company in the event that you are not be able to sell the machine.)Posted PriceExpected Value($)Probability of Sale($)$450,0000.1$$400,0000.3$$350,0000.5$Assume you must commit to one posted price.In order to maximize the expected profit of the potential sale, which posted price would you commit to in order to maximize the expected value of thepotential sale of the machine?O $400,000$450,000O $350,000

In this question, the expected value is to be determined.

Answered: our company has a customer who is…

Advanced Engineering Mathematics

10th Edition

ISBN:9780470458365

Author:Erwin Kreyszig

Publisher:Erwin Kreyszig

Chapter2: Second-order Linear Odes

Section: Chapter Questions

Problem 1RQ

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