Question about maximize expected profit

Reference no: EM1376040

A firm operating a chain of drug stores consider to open a new store in one of locations. The management of firm figures that at the 1st location the store will show an yearly profit of $20,000 if it is successful and an yearly loss of $2,000 if it is not. At the second location, the store will show an annual profit of $25,000 if it is successful and an annual loss of $5,000 if it is not. If the probability of success is 3/5 in the first location and 2/5 in the second location, where should the company open the new store so as to maximize expected profit?

Reference no: EM1376040

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Question about maximize expected profit : A firm operating a chain of drug stores consider to open a new store in one of locations. The management of firm figures that at the 1st location the store will show an yearly profit of $20,000 if it is successful and an yearly loss of $2,000 if it i..

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