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Probability Word/Essay problem

aburchett

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Jan 19, 2011
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The probability 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 67% chance of making a $20,000 profit, a 3% chance of breaking even, and a 30% chance of losing $5,000. How much money does PuroServ expect to make with their new purchase?
 

tkhunny

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Apr 12, 2005
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This is a very simple expectation problem. Please show your efforts. You simply cannot have NO idea.
 

aburchett

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Jan 19, 2011
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67% chance of making $20,000 = 67/100 = .67
3% chance of breaking even = 3/100 = .03
30% chance of losing $5,000= 30/100 = .3

20,000(.67) + 0(.03) + 5,000(.3)=
13,400 + 0 + 1,500=
$14,900

Is this correct?
 

tkhunny

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Apr 12, 2005
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Let's start from the top:

"$20,000 = 67/100" -- Do you believe that?

"Making 20,000" leads to +20,000
"losing 5,000" leads to +5,000? The sign is wrong.
 

aburchett

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Jan 19, 2011
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20,000(.67) + 0(.03) - 5,000(.3)=
13,400 + 0 - 1,500=
$11,900
 

tkhunny

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Apr 12, 2005
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That's it.

Never write "$20,000 = 67/100" again. I should fail you for the whole sememster for that. :roll:
 

aburchett

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Jan 19, 2011
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Thank you so much!! You have been a tremendous help!
 
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