Lola is in the process of forecasting the sales growth rate for an early-stage venture specializing in the production of durable running shoes. Lola predicts a 0.20 probability of an 80% growth in sales, a 0.30 probability of a 60% growth in sales, a 0.40 probability of a 40% growth in sales, and a 0.10 probability of a 10% decrease in sales. What is the expected sales growth rate of the venture?
A)47%
B)49%
C)51%
D)53%

Question

Quizplus · Accepted Answer

The expected sales growth rate is calculated by multiplying each growth rate by its probability and summing the results: (0.20 * 80) + (0.30 * 60) + (0.40 * 40) + (0.10 * -10) = 16 + 18 + 16 - 1 = 49%.

Lola Is in the Process of Forecasting the Sales Growth