In: Finance
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 |
Sales |
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?
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.