Help - Expected Monetary Value
Submitted by alfiegoh on Fri, 08/01/2014 - 07:29
Forums:
You are conducting a quantitative risk analysis on your project in relation to potential profits earned from a new product. The estimate profit is $350,000. There is a 20% chance that it will exceed expectations at a value of $180,000, there is a 50% chance it will meet expectations at a value of $40,000, and a 30% chance it will not meet expectations at a value of($140,000). What is the expected monetary value of the risk ?
A. $364,000
B. ($364,000)
C. (14,000)
D. 14,000
Answer is D. Why ?
