Question
A company is considering a plan that has different profit results under different conditions. Assuming there is a 20% chance of a boom and 10% chance of a recession, compute the expected value of their plan.
Condition Result
Boom $2,000,000 Profit
Average $800,000 Profit
Recession (700,000) Loss
Condition Result
Boom $2,000,000 Profit
Average $800,000 Profit
Recession (700,000) Loss