Question

A construction company is planning to bid on a building contract. The bid costs the company ​$1700. The probability that the bid is accepted is 1/4. If the bid is​ accepted, the company will make ​$16,800 minus the cost of the bid. Find the expected value in this situation.

Answer 1

Answer:

The expected value in this situation is $2075.

Step-by-step explanation:

Given data:

The cost of the bid = $1700

The probability that bid is accepted is = 1/4

If the bid is accepted then company will make = $16,800 - $1700

If the bid is accepted then company will make = $15,100

Expected Value in this situation = ?

Solution:

The given condition is expressed by the following mathematical expression:

Expected Value = 1/4 (15,100) - 1700

Expected Value = 3775 - 1700

Expected Value = $2075