Respuesta :
Answer:
The expected return in the long run for continually trying to develop new drugs is $19 million dollars.
Step-by-step explanation:
We have these following probabilities for the pharmaceutical firm:
A 14% probability that the research to develop a new drug is successful, earning $750 million dollars.
An 86% probability that the research to develop a new drug is unsucessful, losing $100 million dollars.
What is the expected return in the long run for continually trying to develop new drugs?
14% probability of earning $750 million, 86% probability of losing $100 million. So
[tex]E = 0.14*750 - 0.86*100 = 19[/tex]
The expected return in the long run for continually trying to develop new drugs is $19 million dollars.
