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Management has estimated that the real estate can be sold in 5 years for the following possible prices

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I have decided to invest in a piece of real estate. Management has estimated that the real estate can be sold in 5 years for the following possible prices:

Price Probability
$20,000 0.20
$25,000 0.25
$30,000 0.30
$35,000 0.25

What is the expected sales price for the real estate?

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Solution Summary

Brief calculation show how to find the sum of the product of price and probability in order to find the expected sales price for given real estate.

Solution Preview

= Sum of the Product of Price and Probability
= (20000*.2)+(25000*.25)+(30000*.3)+(35000*.25)
=$28000

Note:
*** ...

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