Question

4. ( use disceret probability ) Bill Messmer and his shady partner, Dean Dennis Burke, purchased a foreclosed property for $50,000 and spent an additional $27,000 on repairs. They feel that they have a 15% probability of reselling the property for $120,000, a 45% probability of reselling it for $100,000, a 25% probability of reselling it for $80,000, and a 15% probability of selling it for $60,000. What is their expected profit/loss (gain – loss) for reselling the property? (First develop the discrete probability distribution, then its mean, after that, what the profit/loss - sale price minus cost -would be.) And, can we trust them? with diagram .

10.)Assume that random guesses are made for seven multiple choice questions on an SAT​ test, so that there are n =7 ​trials, each with probability of success​ (correct) given by p=0.35

Find the indicated probability for the number of correct answers. Find the probability that the number x of correct answers is fewer than 4.

Answer 1

ANSWER

4 ) Expected Sale price = 0.15 *(120,000) + 0.45*(100,000) + 0.25*(80,000) + 0.15*(60,000)

= $ 92,000

Expected profit = Expected Sale - Purchase price - Cost of repairs = 92,000 - 50,000 - 27,000

= $15,000

This is the expected profit, but reality might be different from expectations.