A Pharmaceutical Company Has Determined That If a New Cholesterol-Reducing

Essay

A pharmaceutical company has determined that if a new cholesterol-reducing drug is manufactured (introduced to the market),the following probability distribution will describe this drug's contribution to the company's profits during the next six months.
$$\begin{array} { c c } \text { Profit Contribution } & \text { Probability of profit contribution } \\- \$ 30,000 & .20 \\\$ 50,000 & .50 \\\$ 200,000 & .30\end{array}$$
The company management has decided to market this product if the expected contribution to profit for the next six months is more than $90,000.Based on the information given above,should the company begin manufacturing the new drug?