Firm X is considering a project and its analysts have projected the following outcomes and their probabilities. What is the expected value of the outcomes?

Question

Firm X is considering a project and its analysts have projected the following outcomes and their probabilities.  What is the expected value of the outcomes?

Quizplus · Accepted Answer

The expected value can be calculated by multiplying each outcome by its respective probability and then summing all of these products. 
[(0.2 x $2,800) + (0.3 x $8,900) + (0.3 x $9,500) + (0.2 x $10,400)] = $8,265

Firm X Is Considering a Project and Its Analysts Have