Gary’s Pipe and Steel company expects sales next year to be $1,010,000 if the ec

Question

Gary’s Pipe and Steel company expects sales next year to be $1,010,000 if the economy is strong, $705,000 if the economy is steady, and $386,000 if the economy is weak. Gary believes there is a 25 percent probability the economy will be strong, a 45 percent probability of a steady economy, and a 30 percent probability of a weak economy. What is the expected level of sales for next year?

Gary’s Pipe and Steel company expects sales next year to be $1,010,000 if the economy is strong, $705,000 if the economy is steady, and $386,000 if the economy is weak. Gary believes there is a 25 percent probability the economy will be strong, a 45 percent probability of a steady economy, and a 30 percent probability of a weak economy.

What is the expected level of sales for next year?

Explanation / Answer

Expected level of sales                     685,550.00 Dear Student Thank you for using Chegg Please find below the answer Statementshowing Computations Economy Expected Sales Probability Expected level of sales Strong                 1,010,000.00 25%                              252,500.00 Steady                     705,000.00 45%                              317,250.00 Weak                     386,000.00 30%                              115,800.00                 2,101,000.00 100%                              685,550.00

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