The property restoration company PuroServ is considering switching to new dehumidifiers. Their market research, considering the cost of the new machines and their efficiency, tells them that the switch would give them a 54% chance of making a $20,000 profit, a 23% chance of breaking even, and a 23% chance of losing $5,000. How much money does PuroServ expect to make with their new purchase?
Not sure what to do with this one....
see previous post. You need to start posting your thinking and let us critique. You will learn much more that way.
To calculate how much money PuroServ expects to make with the new dehumidifiers, we need to multiply the probability of each outcome by the corresponding monetary value and then sum them up.
Let's break it down step by step:
1. Calculate the profit for each outcome:
- Making a $20,000 profit: 54% chance * $20,000 = $10,800
- Breaking even: 23% chance * $0 = $0
- Losing $5,000: 23% chance * (-$5,000) = -$1,150
2. Sum up the profits:
$10,800 + $0 + (-$1,150) = $9,650
Therefore, PuroServ expects to make $9,650 with their new purchase.