## The probability that a pharmaceutical firm will successfully develop a new drug that will return $750 million dollars is 0.14. Of the resear

Question

The probability that a pharmaceutical firm will successfully develop a new drug that will return $750 million dollars is 0.14. Of the research is unsuccessful, the company incurs a cost of $100 million dollars. What is the expected return in the long run for continually trying to develop new drugs?

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2021-12-31T02:08:45+00:00
2021-12-31T02:08:45+00:00 1 Answer
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## Answers ( )

Answer:The expected return in the long run for continually trying to develop new drugs is $19 million dollars.

Step-by-step explanation:We have these following probabilities for the pharmaceutical firm:A 14% probability that the research to develop a new drug is successful, earning $750 million dollars.

An 86% probability that the research to develop a new drug is unsucessful, losing $100 million dollars.

What is the expected return in the long run for continually trying to develop new drugs?14% probability of earning $750 million, 86% probability of losing $100 million. So

The expected return in the long run for continually trying to develop new drugs is $19 million dollars.