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Fundamentals of Statistics | 4th Edition | ISBN: 9780321838704 | Authors: Michael Sullivan,III
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Chapter 11, Problem 30AYU

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QUESTION:

Real Estate Investment  Shawn and Maddie purchase a foreclosed property for $50,000 and spend an additional $27,000 fixing up the property. They feel that they can resell the property for $120,000 with probability 0.15, $100,000 with probability 0.45, $80,000 with probability 0.25, and $60,000 with probability 0.15. Compute and interpret the expected profit for reselling the property.

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QUESTION:

Real Estate Investment  Shawn and Maddie purchase a foreclosed property for $50,000 and spend an additional $27,000 fixing up the property. They feel that they can resell the property for $120,000 with probability 0.15, $100,000 with probability 0.45, $80,000 with probability 0.25, and $60,000 with probability 0.15. Compute and interpret the expected profit for reselling the property.

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We have Shawn and Maddie purchase a foreclosed property for $50,000 and spend an additional $27,000 fixing up the property. We need to compute and interpret the expected profit for reselling the property.

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