Zse Co June 2010 expected values q

Hi John

Before I watched your lecture on this I had a wild stab at it and I got the correct answer although my method was not the same as yours. Mine was a lot quicker though I am concerned that my method is wrong and its just coincidence I got the right answer and I would run into trouble for a more complicated question

Here it is!

(a) (i)

Opening balance (500)
+8000×0.1=800
+4000×0.6=2400
+(2000)x0.3=(600)
=closing balance at end of period 1 $2100

(ii)
Opening balance 2100
+7000×0.3=2100
+3000×0.5=1500
+(9000)x0.2=(1800)
=closing balance at end of period 2 $3900!!

What do you think?

Cheers

Hugh