You are about to have a meeting with your manager about a raise in your salary.You are going to request an increase of $5,000,but you believe the probability of success to be only 25%.You believe there is a 25% probability your boss will counter with a $3,000 raise and a 25% probability that your boss will offer a $1,000 raise.Finally,there is a 25% probability that you will receive no increase in your salary.What is the expected value of the outcome of your meeting?
A)$2,250
B)$9,000
C)$6,750
D)$3,000

Question

Quizplus · Accepted Answer

The expected value is calculated by multiplying each outcome by its probability and summing the results: (0.25 * $5,000) + (0.25 * $3,000) + (0.25 * $1,000) + (0.25 * $0) = $1,250 + $750 + $250 + $0 = $2,250.

You Are About to Have a Meeting with Your Manager