Thread: finding variance?

heres the probability distribution table, it shows the number of tvs, n, sold per week:

N 1 2 3 4
P(N=n) 0.1 0.2 0.4 0.3

with the information, the fixed costs of the business which sells the tvs is $900 per week and the profit per tv is $375, find the variance in profit each week!

Originally Posted by sillylilly

heres the probability distribution table, it shows the number of tvs, n, sold per week:

N 1 2 3 4
P(N=n) 0.1 0.2 0.4 0.3

with the information, the fixed costs of the business which sells the tvs is $900 per week and the profit per tv is $375, find the variance in profit each week!

Option 1: Construct a table for profit P and the associated probability. Note that P = 375N - 900. Then calculate variance from this table in the usual way.

Option 2: Calculate Var(N) from the given table and then calculate Var(P) = Var(375N - 900) = 375^2 Var(N).

thankyou for your reply,

I tried both these ways and the outcome in both cases was 125,156.25

On one hand, because both ways got the same answer I would expect it to be correct, however that just seems far too great a sum to be true! Do you know what it is , if I am doing this wrong? Or is this the real answer!?