plan B has a higher payout
Explanation:
To determine plan with higher payout, we would find the expected value for each of them
[tex]\begin{gathered} \text{Expected value = sum of product of probability and the values} \\ \text{Expected value =}\sum ^{}_{}x\text{P (x) } \end{gathered}[/tex]
Plan A:
[tex]\begin{gathered} \text{Expected value = 0.14(-15000) + 0.67(5000) + 0.19(80000)} \\ \text{Expected value = 16450} \end{gathered}[/tex]
Plan B:
[tex]\begin{gathered} \text{Expected value = 0.32(-10000) + 0.06(5000)+0.62}(50000) \\ \text{Expected value = }28100 \end{gathered}[/tex]
Plan B value is higher than Plan A.
Hence, plan B has a higher payout
