Problem #5 - Real EstateShawn and Maddie purchase a foreclosed property for $50,000 and spend an additional $27,000 fixing up theproperty. They feel that they can resell the property for $120,000 with probability of 0.15, $100,000 with aprobability of 0.45, $80,000 with a probability of 0.25 and $60,000 with a probability of 0.15. Compute theexpected profit for reselling the property.

It is given that Shawn and Maddie purchase a foreclosed property for $50,000 and spend an additional…

Answered: Problem #5 - Real Estate Shawn and…

A First Course in Probability (10th Edition)

10th Edition

ISBN:9780134753119

Author:Sheldon Ross

Publisher:Sheldon Ross

Chapter1: Combinatorial Analysis

Section: Chapter Questions

Problem 1.1P: a. How many different 7-place license plates are possible if the first 2 places are for letters and...

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A investor estimates that, in a year’s time, a certain stock has a 30% chance to be worth $125 per share, a 45% chance to be worth $90 per share, and a 25% chance to be worth$60 per share. Determine the expectation of the price per share of the stock in a year’s time.
Solve the following probabilty problem: Doris and her friend plan to travel to Florida during the winter intersession period. Based upon the past experience they know that the probability that they go by car is 0.4 and the probability that they go by plane is 0.2. What is the probability that they travel to Florida by car or plane only?
The proprietor of Midland Construction Company has to decide between two projects. He estimates that the first project will yield a profit of $160,000 with a probability of 0.7 or a profit of $120,000 with a probability of 0.3; the second project will yield a profit of $220,000 with a probability of 0.6 or a profit of $70,000 with a probability of 0.4.Find the expected profit for each project. first project $ second project $ Which project should the proprietor choose if he wants to maximize his expected profit? first project second project
Solve the following problems completely. Box and round your final answer up to 4 decimal places. A wallet contains 8 P100 bills, 3 P200 bills, 4 P500 bills, and 2 P1000 bills. You randomly choose 9 bills without replacement. What is the probability that you will choose 2 P200 bills, 1 P1000 bill, 4 P100 bills, and 2 P500 bills?
Suppose an oil company is thinking of buying some land for $10,000,000. There is a 60%60% chance of economic growth and a 40%40% chance of recession. The probability of discovering oil is 44%44% when there is economic growth and 32%32% when there is a recession. If there is economic growth and the oil company discovers oil, the value of the land will triple. If they do not discover oil, the value of the land will decrease by 10%.10%. If there is a recession and the company discovers oil, the value of the land will increase by 50%.50%. If they do not discover oil, the land will decrease in value by 75%.75%. What is the expected value of the investment? Give your answer to the nearest dollar. Avoid rounding within calculations. $$ Select the correct interpretation of the expected value. The expected value represents what the actual investment value will be for this land purchase of $10,000,000. The company should make the investment because the expected value…
It is the beginning of September and you have been offered the following deal to go heli-skiing. If you pick the first week in January and pay for your vacation now, you can get a week of heli-skiing for $2,900. However, if you cannot ski because the helicopters cannot fly due to bad weather, there is no snow, or you get sick, you do not get a refund. There is a 30% probability that you will not be able to ski. If you wait until the last minute and go only if you know that the conditions are perfect and you are well, the vacation will cost you $4,600. You estimate that the pleasure you get from heli-skiing is worth $6,700 per week to you (if you had to pay more than that, you would choose not to go). If your cost of capital is 11% per year, should you book ahead or wait? You should because the NPV of this choice is $ book ahead wait (Round to two decimal places.)
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An analyst attempting to predict a corporation’s earnings next year believes that the corporation’s business is quite sensitive to the level of interest rates. He believes that, if average rates in the next year are more than 1% higher than this year, the probability of significant earnings growth is 0.1. If average rates next year are more than 1% lower than this year, the probability of significant earnings growth is estimated to be 0.8. Finally, if average interest rates next year are within 1% of this year’s rates, the probability for significant earnings growth is put at 0.5. The analyst estimates that the probability is 0.25 that rates next year will be more than 1% higher than this year and 0.15 that they will be more than 1% lower than this year.a. What is the estimated probability that both interest rates will be 1% higher and significant earnings growth will result?b. What is the probability that this corporation will experience significant earnings growth?c. If the…
EXAMPLE 32. The probability that a contractor will get a plumbing contract is 2/3, and the probability that he will not get an electric contract is 5/9, the probability of getting at least one contract is 4/5, what is the probability that he will get both ?
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