A store specializing in mountain bikes is to open in one of two malls. If the first mall is selected, the store anticipates a yearly profit of $1,200,000 if successful and a yearly loss of $400,000 otherwise. The probability of success is 1/2. If the second mall is selected, it is estimated that the yearly profit will be $800,000 if successful; otherwise, the annual loss will be $240,000. The probability of success at the second mall is 3/4. Complete parts (a) through (c) below
a. What is the expected profit for the first mall?
b. What is the expected profit for the second mall?
c. Which mall should be chosen in order to maximize the expected profit?
The first mall should be chosen in order to maximize profit.
The second mall should be chosen in order to maximize profit.
Either of the two malls may be chosen; the profit will be the same.