Use expected value to determine which location Is better.
• Location 1: According to my consultant, if the bakery is successful, I can anticipate an annual profit of $300,000. If it’s not successful, I can anticipate an annual loss of $100,000. The probability of success at this location is 0.5.
• Location 2: According to my consultant, if the bakery is successful, I can anticipate an annual profit of $200,000. If it’s not successful, I can anticipate an annual loss of $60,000. The probability of success at this location is 0.75.

Question

Use expected value to determine which location Is better.
• Location 1: According to my consultant, if the bakery is successful, I can anticipate an annual profit of $300,000. If it’s not successful, I can anticipate an annual loss of $100,000. The probability of success at this location is 0.5.
• Location 2: According to my consultant, if the bakery is successful, I can anticipate an annual profit of $200,000. If it’s not successful, I can anticipate an annual loss of $60,000. The probability of success at this location is 0.75.