Anil's company estimates the net profit on a new products, it is launching to र 3,000,000 during the first year if it successful र 1,000,000 if it is unsuccessful The company assigns the following probabillities to first yesar prospects for the product successful: 0.15 moderately successful 0.25 and unseccessful 0.60 . Then the standard deviation of first year net profit fot the product (in million) is

Options

A. 1.48
B. 12.4
C. 13.8
D. None of these

Answer

A

Explanation

The probability distribution of net profit (X) of the new product in the first year is given to be
Therefore, expected value of profit is given by
`E(X)=SigmaXP(X)=3xx0.15+1xx0.25-1xx0.60`
`=र 0.10" million"=र 1,00,000`
`E(X^2)=SigmaX^2P(X)`
`=9xx0.15+1xx0.25+1xx0.6 = र 2.20" million"`
Var `(X)=E(X^2)-{E(X)}^2=2.20-(0.10)^2=2.19`
`SD=sigma=sqrt(2.19)`
= र 1.48 million