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(52788) About Me  (Show Source):
You can put this solution on YOUR website!
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The expected value is  %281%2F4%29%2A%2815600+-+1900%29+-+1900 dollars = 1525 dollars.


Explanation :


    With the probability of  1%2F4  the company will make (15600-1900) dollars, but in any case they should spend $1900 on the bid.