Question

In: Finance

Myers Business Systems is evaluating the introduction of a new product. The possible levels of unit...

Myers Business Systems is evaluating the introduction of a new product. The possible levels of unit sales and the probabilities of their occurrence are given next:

Possible
Market Reaction

Sales
in Units

Probabilities

Low response

20

.10

Moderate response

40

.30

High response

55

.40

Very high response

70

.20

a. What is the expected value of unit sales for the new product?

b. What is the standard deviation of unit sales?

Solutions

Expert Solution

Solution :

a. The expected value of unit sales for the new product = 50 Units

b. The standard deviation of unit sales = 14.49 Units

Please find the attached screenshot of the excel sheet containing the detailed calculation for the solution.


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