A store specializing in mountain bikes is to open in one of two malls. If the first mall is​ selected,

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.

Leave a Reply

Your email address will not be published. Required fields are marked *