Probability/ in a proposed business venture, a businesswoman estimates there is a 50% chance she will make $59,000 and a 50 % chance she will lose $61,000 determine her expected value

Answer 1

Expected value = sum (x(i) * P(x(i)), where x(i) = amount she will earn and P(x(i)) is probability of earning that amount x(i), where i = 1,2.

0.5 * $59000 + 0.5 * -$61000 = 0.5 * -$2000 = -$1000