A construction company is planning to bid on a building contract. The bid costs the company $1100. The probability that the bid is accepted is 0.1. If the bid is accepted, the company will make $91,000 minus the cost of the bid.

What is the expected value in this situation? Round to the nearest dollar.

Question

A construction company is planning to bid on a building contract. The bid costs the company $1100. The probability that the bid is accepted is 0.1. If the bid is accepted, the company will make $91,000 minus the cost of the bid.

What is the expected value in this situation? Round to the nearest dollar.

anonymous · Answer

would i multiply $1100*0.1 ot 91000*0.1? im not quite sure how to set it up and it is not a multiple choice answer =(

anonymous · Answer

i got 8000?

kropot72 · Answer

Yes, the expected profit is $8000.

kropot72 · Answer

Do you need an explanation?