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Your company bids on two contracts. You believe the probability that you get the first contract is 0.75 and if you get the first contract the probability that you also get the second one is 0.4. If you do not get the first contract the probability that you get the second one is 0.45. If you get both contracts the profit will be $75,000 for the company, if you get only one the profit will be $15,000. It costs the company $10,000 per contract to make a bid. What is the expected profit for the company?

 

A) -$20,000

B) $8,187.50

C) $33,687.50

D) $28,187.50

Jaleco  Oct 23, 2018
 #1
avatar+93866 
+2

I think it is $28,187.50

 

0.75*0.4=0.3  and 0.3*57000=  $22500

0.75*0.6=0.45 and 0.45*15000=$6750

0.25*0.45=0.1125 and  0.1125*15000=$1687.50

0.25*0.55=0.1375  and  0.1375*-20000 = -$2750

 

When all of those are added together I get   $28187.50

Melody  Oct 26, 2018

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