Explanation Given: The first project yields a profit of $ 180 , 000 and $ 150 , 000 with probabilities 0.7 and 0.3 . The second project yields a profit of $ 220 , 000 and $ 80 , 000 with probabilities 0.6 and 0.4 . Approach: The expected value of X , denoted by E ( X ) is given by, E ( X ) = x 1 p 1 + x 2 p 2 + ........ + x n p n Here, x 1 , x 2 , ........ , x n are the values of random variable X with associated probabilities p 1 , p 2 , ....... , p n respectively. Calculation: Let X denote the profit from the first project. Find the expected profit from the first project. E ( X ) = x 1 p 1 + x 2 p 2 = ( $ 180 , 000 ) P ( X = $ 180 , 000 ) + ( $ 150 , 000 ) P ( X = $ 150 , 000 ) = ( $ 180 , 000 ) ( 0

WebAssign Printed Access Card for Tan's Finite Mathematics for the Managerial, Life, and Social Sciences, 12th Edition, Single-Term

12th Edition

ISBN: 9781337652766

Author: Soo T. Tan

Publisher: Cengage Learning

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Chapter 8.2, Problem 20E

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The project to be chosen by the proprietor with maximum profit.

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Chapter 8.2, Problem 19E

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Chapter 8 Solutions

WebAssign Printed Access Card for Tan's Finite Mathematics for the Managerial, Life, and Social Sciences, 12th Edition, Single-Term

Ch. 8.1 - What is a random variable? Give an example.Ch. 8.1 - Prob. 2CQ Ch. 8.1 - Prob. 3CQ Ch. 8.1 - Three balls are selected at random without...Ch. 8.1 - 2.A coin is tossed four times. Let the random...Ch. 8.1 - A die is rolled repeatedly until a 6 falls...Ch. 8.1 - Cards are selected one at a time without...Ch. 8.1 - Prob. 5E Ch. 8.1 - Prob. 6E Ch. 8.1 - Prob. 7E

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The project to be chosen by the proprietor with maximum profit.

Solution Summary: The author explains that the proprietor should choose the first project with maximum profit. The second project yields a profit of 220,000 and 80,000.

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To find:

The project to be chosen by the proprietor with maximum profit.