A store specializing in mountain bikes is to open in one of two malls. If the first mall is selected, the store anticipates a yearly profit of $300,000 if successful, and a yearly loss of $100,000 otherwise. The probability of success is .5. If the second mall is selected, it is estimated that the yearly profit will be $200,000 if successful; otherwise, the annual loss will be $60,000. The probability of success at the second mall is .75.

What is the expected profit for the second mall?

Question

A store specializing in mountain bikes is to open in one of two malls. If the first mall is selected, the store anticipates a yearly profit of $300,000 if successful, and a yearly loss of $100,000 otherwise. The probability of success is .5. If the second mall is selected, it is estimated that the yearly profit will be $200,000 if successful; otherwise, the annual loss will be $60,000. The probability of success at the second mall is .75.

What is the expected profit for the second mall?

slaaibak · Answer

If second mall is chosen:

200 000 * .75 - 60 000 * .25