Question

Expense Forecasts:

The budgeting process for a mid-western college resulted in expense forecasts for the coming year (in $ millions) of $9, $10, $11, $12, and $13. Because the actual expenses are unknown, the following respective probabilities are assigned: .3, .2, .25, .05, and .2.

a. Show the probability distributions for the expense forecast. Using excel

b. What is the expected value of the expense forecast for the coming ear?

c. What is the variance of the expense forecast for the coming year. Using Excel

d. If income projections for the ear are estimated at $12 million, comment on the financial position of the college.

Answer 1