A-Z Technologies, a manufacturer of amplified pressure transducers, is trying to decide between a dual-speed and a variable-speed machine. The engineers are not sure about the salvage value of the variable speed machine, so they have asked several different used-equipment dealers for estimates. The results can be summarized as follows: there is a 35% chance of getting $18,000, a 41% chance of getting $24,000, and a 13% chance of getting $29,000. Also, there is an 11% chance that the company may have to pay $5000 to dispose of the equipment. Calculate the expected salvage value.
A-Z Technologies, a manufacturer of amplified pressure transducers, is trying to decide between a dual-speed and a variable-speed machine. The engineers are not sure about the salvage value of the variable speed machine, so they have asked several different used-equipment dealers for estimates. The results can be summarized as follows: there is a 35% chance of getting $18,000, a 41% chance of getting $24,000, and a 13% chance of getting $29,000. Also, there is an 11% chance that the company may have to pay $5000 to dispose of the equipment. Calculate the expected salvage value.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
A-Z Technologies, a manufacturer of amplified
pressure transducers, is trying to decide between
a dual-speed and a variable-speed machine. The
engineers are not sure about the salvage value of
the variable speed machine, so they have asked
several different used-equipment dealers for estimates.
The results can be summarized as follows:
there is a 35% chance of getting $18,000, a 41%
chance of getting $24,000, and a 13% chance of
getting $29,000. Also, there is an 11% chance
that the company may have to pay $5000 to dispose
of the equipment. Calculate the expected
salvage value.
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