Question

A contractor has a 0.05 probability of making 200,000, a 0.5 probability of making 14,000, a 0.02 probability of losing 1,100,000, and a 0.43 probability of breaking even. What is the contractor‘s expected value?

Answer 1

Expected value is simply the sum of the products of every possible probability within the distribution times its corresponding amount.

Explanation:

E(x) `=0.05*$200,000+0.5*$14,000+0.02*-$1,100,000+0.43*$0.00`

I'll leave the arithmetic for you :)

hope that helped