Your firm faces considerable revenue uncertainty

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Your firm faces considerable revenue uncertainty because you have to negotiate contracts with several customers. You forecast a 20 percent chance that your revenues will be $200,000, a 30 percent chance that your revenues will be $300,000, and a 50 percent chance that your revenues will be $500,000. Your costs are also uncertain because the prices of your supplies fluctuate considerably. You forecast a 40 percent chance that your costs will be $400,000 and a 60 percent chance that your costs will be $250,000. How do you find the expected profit? (A step by step explanation would be greatly appreciated!)

Reference no: EM13998370

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