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Expected value of additional revenue

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Assume the $3,000 of additional annual revenue from the new machine is not known with certainty. If the following probability distribution applies to each year's additional revenue from the new machine and management wants to make its decisions on the basis of the expected value of this additional revenue, should Automax Auto Parts Corporation invest in the new machine? Show your calculations

Probability Additional Revenue

0.10 $ 2,000
0.20 3,000
0.40 3,600
0.15 5,000
0.10 8,000
0.05 10,000

Reference no: EM132975330

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