The standard deviation of the estimated profit

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Reference no: EM13114031

Gain Communications sells aircraft communications units to both the military and the civilain markets. Next year's sales depend on market conditions that cannot be predicted exactly. Gain follows the modern practice of using probability estimates of sales. The military division estimates its sales as follows.

X = units sold 1000 3000 5000 10000
Probability 0.2 0.2 0.3 0.3
The corresponding sales estimates for the civilian division are as follows.
Y = units sold 300 500 750
Probability 0.4 0.5 0.1
We have already calculated the following statistics.
μX = 5300 units; σX2 = 11410000; μY = 445 units; μZ = $12157500, where Z = 2000X + 3500Y

Find the standard deviation of the estimated profit, Z = 2000X + 3500Y.

Reference no: EM13114031

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