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800,000 x .50 expected outcome + 400,000 normal condition
(500,000) x .30 expected outcome + 150,000
Expected value of return = + 250,000
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I don't get the math here. What happened to the 1,500,000?
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The book show substration from normal minus tight??? What do you think
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I think CaptainForest is right. I don't understand why you'd just dump out the 1,500,000, nor do I understand why this would be a subtraction. Not to mention that it's impossible for the "expected" sales to be
less than any of the three estimates! The answer must be between the low and high estimates.
It's basically a weighted average, because the percents "weight" each amount by the probability that they will happen. And when using percents, the division is already built in, so you just need to add them up. And "expected" number is the average. And the 850,000 is the weighted average here.
Regardless of the finances, this is actually probabilities, i.e. statistics. If you'd like, you can re-post this under the math homework help section. It doesn't matter that it's sales. It's still probabilities. I do stats too but am not an expert at it. So you can check with the math people if you'd like.
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