a business has an opportunity to invest $35,000. if the investment is a success, the business earns a profit…

a business has an opportunity to invest $35,000. if the investment is a success, the business earns a profit of $150,000. otherwise, the investment will result in a total loss of all monies. if the investment has 0.27 chance of success, which equation correctly models the expected value of this investment?\n0.27(150,000)+0.73(-35,000)=e(x)\n150,000 - 0.73(35,000)=e(x)\n0.27(150,000 - 35,000)=e(x)\n0.27(115,000)+0.73(-35,000)=e(x)

a business has an opportunity to invest $35,000. if the investment is a success, the business earns a profit of $150,000. otherwise, the investment will result in a total loss of all monies. if the investment has 0.27 chance of success, which equation correctly models the expected value of this investment?\n0.27(150,000)+0.73(-35,000)=e(x)\n150,000 - 0.73(35,000)=e(x)\n0.27(150,000 - 35,000)=e(x)\n0.27(115,000)+0.73(-35,000)=e(x)

Answer

Explanation:

Step1: Calculate the profit if successful

If the investment is a success, the profit is (150000 - 35000=115000) (because the initial investment of (35000) is already accounted for, the net profit is total profit minus investment). The probability of success is (0.27).

Step2: Calculate the loss if not successful

If the investment is not a success (probability (1 - 0.27=0.73)), the loss is (- 35000) (negative because it's a loss of the initial investment).

Using the formula for expected value (E(X)=\sum_{i}x_ip_i), where (x_i) are the outcomes and (p_i) are the probabilities.

The expected - value formula for this investment is (E(X)=0.27\times(115000)+0.73\times(- 35000))

Answer:

(0.27(115,000)+0.73(-35,000)=E(X))