A company is planning to launch a new product. The price at which it can sell the product will be determined by the number of other entrants into the market. The possible selling prices and variable costs and their respective associated probabilities are as follows:
Selling price per unit Variable cost per unit
$ Probability $ Probability
80 0.25 40 0.20
100 0.30 60 0.55
120 0.45 80 0.25
Selling price and variable cost per unit are independent of each other.
What is the expected value of the contribution per unit?
