A mineral economist estimated that a particular mining ventu

A mineral economist estimated that a particular mining venture had probability 0.4 of a $30 million loss, probability 0.5 of a $20 million profit, and probability 0.1 of a $40 million profit. Let times represent the profit, in millions of dollars. Find the probability distribution of the profit and the expected value of the profit. Does this venture represent an expected gain or an expected loss What would your recommendation be to the company

Solution

The expected value will be equal to =(0.40)-30 + 0.5(20) + 0.1*40 = -2 milllion
Probability distribution can be made simply by rectnagular bar graph