State Company Had Determined Its Earnings Before Interest and Taxes

Multiple Choice

State Company had determined its earnings before interest and taxes (EBIT) in four possible states of the world. In the Great State, EBIT will be $3,000,000 and in the Good, Normal and Poor States EBIT will be $2,000,000, $1,500,000, and $1,000,000 in that order. If each state has an equal probability of occurring, then what is State Company's expected EBIT?

A) $3,000,000
B) $2,500,000
C) $1,875,000
D) none of the above