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7 November, 20:49

there is a 40% chance that you will lose $25,000 if you invest in a company, but there is a 25% chance that you will break even and a 35% chance that you make $40,000. what is the excepted value of the investment?

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  1. 8 November, 00:15
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    4000

    Step-by-step explanation:

    Remark

    The expected value is found by multiplying the value by it's probability. For the first one 40% * ( - 25000) = - 10000

    Breaking even means that you neither add nor subtract a given amount

    25% * 0 = 0

    35% * 40000 = 14000

    So the expected value = - 10000 + 14000 = 4000

    Summary

    Loss: - 10000 Break Even: 0 Win: 14000 Expected value 4000
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