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Based on past experience, a building contractor sets the
probability of winning a contract at 0.30. The contract is
worth $25,000 and the cost to prepare the contract proposal
is $2400. What is the expected value of the contract
proposal?

Respuesta :

Answer: $5100

Step-by-step explanation:

The expected value of the contract proposal should be considered as the $24,280.

Calculation of the expected value:

Since  

The probability of winning a contract at 0.30.

The contract is worth $25,000 and the cost to prepare the contract proposal is $2400.

So here the expected value be like

= $25,000 - (0.30) ($2,400)

= $25,000 - $720

= $24,280

hence, The expected value of the contract proposal should be considered as the $24,280.

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