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

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?

Solution Preview

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

Note:
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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.

$2.19