SOLUTION: A construction company is planning to bid on a building contract. The bid costs the company ​$1900. The probability that the bid is accepted is 1/4. If the bid is​ accepted,

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Question 1138260: A construction company is planning to bid on a building contract. The bid costs the company ​$1900. The probability that the bid is accepted is 1/4. If the bid is​ accepted, the company will make ​$15,600 minus the cost of the bid.
What is the expected value in this​ situation?​$​(Round to the nearest​ dollar.)
Answer by ikleyn(52790)   (Show Source): You can put this solution on YOUR website!
.

The expected value is   dollars = 1525 dollars.


Explanation :


    With the probability of    the company will make (15600-1900) dollars, but in any case they should spend $1900 on the bid.


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