Calculate the expected value of the total sates revenue

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Reference no: EM133042277

Problem - A company is considering introducing a new product. Market research suggests that the setting price per unit should be R24, R25 or R26. The marketing department has produced estimates of sales demand and their associated probabilities for each possible selling price. These estimates, based on pessimistic, likely and optimistic forecasts, are as follows:

Selling price

R24

R25

R26

Sales demand Units

Probability

Sales demand Units

Probability

Sales demand Units

Probability

Pessimistic

70,000

0.2

60,000

0.1

30,000

0.3

Likely

80,000

0.5

70,000

0.6

60,000

0.4

Optimistic

90,000

0.3

90,000

0.3

70,000

0.3

Required - Calculate the expected value of the total sates revenue for each of the selling prices.

Reference no: EM133042277

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