Phil Dunphy, a real estate agent, is considering whether he should list an unusual $393,668 house for sale.  If he lists it, he will need to spend $4,295 in advertising, staging, and fresh cookies.  The current owner has given Phil 6 months to sell the house.  If he sells it, he will receive a commission of $16,068.  If he is unable to sell the house, he will lose the listing and his expenses.  Phil estimates the probability of selling this house in 6 months to be 25%.  What is the expected profit on this listing?   Your Answer:

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Phil Dunphy, a real estate agent, is considering whether he should list an unusual $393,668 house for sale.  If he lists it, he will need to spend $4,295 in advertising, staging, and fresh cookies.  The current owner has given Phil 6 months to sell the house.  If he sells it, he will receive a commission of $16,068.  If he is unable to sell the house, he will lose the listing and his expenses.  Phil estimates the probability of selling this house in 6 months to be 25%.  What is the expected profit on this listing?

 

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