What is the expected value for the decision alternative to select the heart lab?
A)$100,000
B)$60,000
C)$50,000
D)$40,000
E)$20,000

Question

Quizplus · Accepted Answer

The expected value for selecting the heart lab is calculated as follows: 
(0.4 x $100,000) + (0.3 x $50,000) + (0.3 x $20,000) = $40,000 + $15,000 + $6,000 = $61,000. Therefore, the expected value of the heart lab is $50,000 which is the highest among all the options. Hence, choosing the heart lab is the best choice.

What Is the Expected Value for the Decision Alternative to Select