### 8.3 Expected Value

<
>
• Math Help

Cell phone A's cost of development is \$2,500,000. If the net sales are \$5,000,000, then the company's profit will be

If the net sales are \$3,000,000, then the company's profit will be

If the net sales are \$1,500,000, then the company's profit will be

Cell phone B's cost of development is \$1,500,000. If the net sales are \$4,000,000, then the company's profit will be

If the net sales are \$2,000,000, then the company's profit will be

If the net sales are \$500,000, then the company's profit will be

• Consumer Suggestion

Are you planning on buying a new cell phone? You need to decide if you want a conventional cell phone or a smart phone. You also want to take into consideration the cell phone provider. Visit the Cell Phone & Service Buying Guide from ConsumerReports.org to compare the two types of phones and their features, find the top rated cell phones in each category, and compare service providers.

• Checkpoint Solution

For cell phone C, the company's profit is found by subtracting \$2 million from the net sales. For cell phone D, the company's profit is found by subtracting \$1.5 million from the net sales. A decision tree is shown below.

I would develop cell phone C because it has a much higher expected value, \$1.5 million, compared to \$0.65 million. It also has the greatest profit, \$3 million, in the best case scenario and the least loss, \$0.5 million, in the worst case scenario.

These comments are not screened before publication. Constructive debate about the information on this page is welcome, but personal attacks are not. Please do not post comments that are commercial in nature or that violate copyright. Comments that we regard as obscene, defamatory, or intended to incite violence will be removed. If you find a comment offensive, you may flag it.
```  ____      _____     _  _    _    _   __    __