Question

Calculate the Expected Value for Form Joint Venture
Success Moderate Success Failure
Probability 0.3 0.3 0.4
Sell Company 102 102 102
Form Joint Venture 210 120 88
Sell Software on own 420 247 100

Answer 1

Expected value = 0.3(210) + 0.3(120) + 0.4(88) = 63 + 36 + 35.2 = 134.2

So the expected value for "Form Joint Venture" is 134.2 (same units as the payoffs).