XYZ Corp expects to have $350,000 in sales in a poor economy,$500,000 in a moderate economy,and $900,000 in a booming economy.If the chances of a booming economy and poor economy are 10% each,what is the expected return?
A) 525,000
B) 512,500
C) 500,000
D) 805,000
E) 621,000

Question

Quizplus · Accepted Answer

Expected return = E(k) = Pr₁k₁+ Pr₂k₂ + ... + Pr_nk_n Expected return = 350,000 × 10% + 500,000 × 80% + 900,000 × 10% = 525,000

XYZ Corp Expects to Have $350,000 in Sales in a Poor