An architect is considering bidding for the design of a new museum. The cost of drawing plans and submitting a model is $13,000. The probability of being awarded the bid is 0.1, and anticipated profits are $130,000, resulting in a possible gain of this amount minus the $13,000 cost for plans and a model. What is the expected value in this situation? Round your answer to the nearest dollar.

Question

anonymous · Answer

Cost is for real, profit is possible only with a chance of 0.1 probability.

So, the expected value = 0.1*130,000 - 13,000. = 0