Based on the profit estimates and their probabilities, the profit expectation for this company is $34,600.
The profit expectation is a weighted average of the profits and their probabilities.
The profit expectation is therefore:
= (100,000 x 0.10) + (60,000 x 0.30) + (30,000 x 0.30) + (0 x 0.20) + (-20,000 x 0.08) + (-40,000 x 0.02)
= 10,000 + 18,000 + 9,000 + 0 - 1,600 - 800
= $34,600
In conclusion, the profit expectation is $34,600.
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