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Chapter 2: 4BP (page 114)

The Alliance Corp. expects to sell the following number of units of copper cables at the prices indicated, under three different scenarios in the economy. The probability of each outcome is indicated. What is the expected value of the total sales projection?

Outcome

Probability

Units

Price

A

0.70

225

$20

B

0.10

370

35

C

0.20

510

45

Short Answer

Expert verified

The total sales value projection of the company is $9,035.

Step by step solution

01

Expected sales value of A

Expectedsales=Unitssold脳Unitprice脳Probability=225脳$20脳0.70=$3,150

02

Expected sales value of B

Expectedsales=Unitssold脳Unitprice脳Probability=370脳$35脳0.10=$1,295

03

Expected sales value of C

Expectedsales=Unitssold脳Unitprice脳Probability=510脳$45脳0.20=$4,590

04

Expected total sales value projection of the Alliance Corp.

Expectedtotalsalesvalue=ExpectedsalesofA+ExpectedsalesofB+ExpectedsalesofC=$3,150+$1,295+$4,590=$9,035

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