Using the given discrete distribution, it is found that the expected value is of $863.93.
What is the mean of a discrete distribution?
The expected value of a discrete distribution is given by the sum of each outcome multiplied by it's respective probability.
In this problem, the distribution of costs is given by:
- P(X = 986) = 0.87.
- P(X = 47) = 0.13.
Hence, the expected value is given by:
E(X) = 0.87 x 986 + 0.13 x 47 = $863.93.
More can be learned about discrete distributions at