document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=181541>Question 181541</A>: <I><SPAN STYLE=\"word-break: break-all;\"> an architect is considering bidding for the design of a new theater. the cost of drawing plans and submitting a model is $15,000. the probability fo being awarded the bid is 0.2, and the anticipated probfits are $80,000, resulting in a possible gain of teh amount minus the $15,000 cost for the plans adn models. what is the expected value if the architect decides to bid for the design? Descrbe what this value means. </SPAN>\n" );
document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #136130 by </B><A HREF=/tutors/aboutme.mpl?userid=Mathtut><B>Mathtut(3670)</B></A><img src=\"/images/stars/stars-13.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=Mathtut><IMG SRC=http://www.algebra.com/images/aboutme-small.gif BORDER=0 alt=\"About Me\" VALIGN=MIDDLE></A>&nbsp;<IMG SRC=http://www.algebra.com/images/nopicture.jpg><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=136130\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> let X be the possible payouts<BR>\n" );
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document.write( "E(X)=((P(c)* X(c))+(P(~c)* X(~c))=(.2(65000)+.8(-15000))=1000<BR>\n" );
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document.write( "now since expected value is the average of all possible outcomes, adjusted (or “weighted”) for the likelihood that each outcome will occur, then <BR>\n" );
document.write( "1000 dollars represents the average of possible outcomes(adjusted)for the likely hood of each outcome. </SPAN>\n" );
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