Correction of Exercise 2, Chapter 3:

Correction of Exercise 2, Chapter 3:

1.     Bora are working with I-Qlick Cambodia. He is printer sellers. Selling in the showroom, he will sell up to 5 printers per day about $ 500.00. Selling to dealer about 8 printers ($800.00), and at the promotion booth, 3 printers ($300.00). However, they can know only percentage distribution of selling to dealers is 55%, and 34% is at showroom.

Please find the expected value of Bora in selling printers?

As mentioned, there are 3 events possible to occur.

So, the Formula Expected value – Ev = R1.P1  + R2.P2 + R3.P3

Where

      R1 = return from event 1, selling to dealer: 800 ,

R2 = return from event 2, selling in showroom: 500 ,

R3 = return from event 3, selling at promotion booth: 300

Let P1 : percentage of possible event 1, selling to dealer: 55%

P2 : percentage of possible event 2, selling in showroom: 34%

P3 : percentage of possible event 3, selling at promotion booth: ??

As we know, Total PD = 1

Total PD = P1 + P2 + P3

Then P1 + P2 + P3 = 1

P3 = 1 – (P1 + P2) = 1 – (0.55 + 0.34) = 1 – 0.89 = 0.11

Then Ev = (800x0.55) + (500x0.34) + (300x0.11) =  643

Finally, his average expected return from his 10 shares is Ev = $ 643.00