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As is below, the profits of my firm next year depend on whether the economy in West Virginia is good, fair, or poor since my business is very tied to...
As is below, the profits of my firm next year depend on whether the economy in West Virginia is good, fair, or poor since my business is very tied to that economy. In fact if the economy is poor I will make losses.
Economy is Good: profits = $200,000 ; Fair: profits = $100,000 ; Poor: profits = -$40,000
Suppose there is a 65% chance the economy will be good, 25% chance for fair, and 10% chance for the economy to be poor. What are the expected profits of my firm for next year?
A. $159,000 B. $151,000 C. $127,000 D. $113,333 E. None of A thru D.