The L. M. Corporation purchases old, run-down buildings, remodels them, and then sells them. The corporation has the opportunity to purchase a building for $100,000, which will cost $60,000 to remodel. The manager thinks there is a 50% chance that the building will sell for $120,000, yielding a $40,000 loss, a 20% chance that the building will sell for $180,000, yielding a $20,000 profit, and a 30% chance that the building will sell for $230,000, yielding a $70,000 profit. What is the expected profit? = E( X – ) = ( xi – What is Var(X)?
