Expected Value and Variance Calculation of Profit

Very Hard Probability Concepts Expected Value And Variance

A company is considering launching a new product and has estimated the below probabilities and associated payouts:

- There is a 50% chance of earning $200,000 profit.

- There is a 30% chance of earning $100,000 profit.

- There is a 20% chance of incurring a $50,000 loss.

Based on this data, calculate the expected value and the variance of the profit. What is the expected value per trial?

Expected Value: $85,000; Variance: $14,750,000

Expected Value: $75,000; Variance: $11,250,000

Expected Value: $90,000; Variance: $12,500,000

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