Question

Solve the problem 18) A contractor is considering a sale that promises a profit of S23,00wy or a loss (due to bad weather, strikes, and such) of $13,000 with a probosriiy s expected profit? A) $16,100 B) $10,000 ) $12,20

Answer 1

Solution:

We are given

Profit = $23,000

Probability of profit = 0.7

Loss = $13000

Probability of loss = 0.3

Expected profit = Profit* Probability of profit – loss* Probability of loss

Expected profit = 23000*0.7 – 13000*0.3

Expected profit = 16100 - 3900

Expected profit = 12200

Expected profit = $12,200

Correct Answer: C) $12,200