Sunglass Heaven Inc. is launching a new store in a shopping mall in Houston. The annual revenue of

QUESTION

Sunglass Heaven, Inc., is launching a new store in a shopping mall in Houston. The annual revenue of the store depends on the weather conditions in the summer in Houston. The annual revenue will be $240,000 in a sizzling summer with a probability of 0.3, $80,000 in a cool summer with a probability of 0.2, and $150,000 in a normal summer with a probability of 0.5. What is the expected annual revenue for the store?
Solution: For Sunglass Heaven, Inc.: Condition Probability Annual Revenue Sizzling Summer 0.3 $240000 Cool Summer 0.2 $80000 Normal

mer 0.5 $150000 Expected Annual Revenue = 0.3*$240000 + 0.2*$80000 + 0.5*$150000 = $163000

ANSWER:

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