A manufacturer is considering building a new and better mousetrap. She estimates the probability that the new mousetrap will be successful is . If it is successful, it would be able to make $120,000. Of course, she would make nothing if it were unsuccessful. The development costs for the mousetrap are $98,000. What is the expected value?
So if She is able to make $120,000 on the trap, but it cost$98,000, just subtract $98,000 from $120,000 and you get $22,000 if she is successful she can expect that much
