What is the variance of expense forecast

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Reference no: EM1317444

To find out the expected value and variance using probability distribution.

The budgeting process for a Midwestern college resulted in expense forecasts for the coming year (in $ millions) of $9, $10, $11, $12, and $13. Since the actual expenses are unknown, the following respective probabilities are assigned: .3, .2, .25, .05, and .2.

a. Show the probability distribution for the expense forecast.

b. What is the expected value of expense forecast for the coming year?

c. What is the variance of expense forecast for the coming year?

d. If income projections for the year are estimated at $12 million, comment on financial position of the college.

Reference no: EM1317444

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