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A construction company is considering submitting bids for two contracts. It will cost the company \$10{,}000$10,000dollar sign, 10, comma, 000 to prepare and submit the bids, and if won, each bid would produce \$50{,}000$50,000dollar sign, 50, comma, 000 of income to the company. The company estimates that it has a 10\%10%10, percent chance of winning any given bid.

Here is the probability distribution of X=X=X, equals the number of bids the company wins, and M=M=M, equals the amount of money the company profits from the bids.
X=\# \text{ of bids won}X=# of bids wonX, equals, \#, start text, space, o, f, space, b, i, d, s, space, w, o, n, end text 000 111 222
M=\text{profit}M=profitM, equals, start text, p, r, o, f, i, t, end text -\$10{,}000−$10,000minus, dollar sign, 10, comma, 000 \$40{,}000$40,000dollar sign, 40, comma, 000 \$90{,}000$90,000dollar sign, 90, comma, 000
Probability 0.810.810, point, 81 0.180.180, point, 18 0.010.010, point, 01
Calculate the mean of MMM.

User Dcc
by
4.9k points

2 Answers

2 votes

Answer:

0.2, as stated on Khan.

Explanation:

Pay attention to the wording. There are two similar problems with wording, but the numbers are altered.

A construction company is considering submitting bids for two contracts. It will cost-example-1
User Muzafar Ali
by
4.8k points
4 votes

Answer:

0 dollars

=E(M)

M

=−$10,000(0.81)+$40,000(0.18)+$90,000(0.01)

=−8,100+7,200+900

=0

User Pedro Felix
by
5.1k points
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