Question 1113001: A company estimates that it has a 55% chance of being successful in bidding on a $64,000 contract. If it costs $4,400 in consultant fees to prepare the bid, what is the expected gain or loss for the company if it decides to bid on this contract?
Answer by stanbon(75887)   (Show Source):
You can put this solution on YOUR website! A company estimates that it has a 55% chance of being successful in bidding on a $64,000 contract. If it costs $4,400 in consultant fees to prepare the bid, what is the expected gain or loss for the company if it decides to bid on this contract?
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random "gain" for the company:: 59600....-4400
corresponding probabilities:::: 0.55..... 0.45
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Expected "gain" for the com:: 0.55*59600-0.45*4400 = $30,800
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Cheers,
Stan H.
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