Question
A contractor is considering a sale that promises a profit of $ 26,000 with a probability of .7 or a loss (due to bad weather, strikes, and such) of $ 4000 with a probability of .3. What is the expected profit.
Can someone help me with this.
Can someone help me with this.
Answers
Damon
Say he builds 100 houses with these ground rules
70 at + 26,000 = +1,820,000
30 at -4000 = - 120,000
total = 1,700,000 for the 100 houses
so
17,000 profit per house
70 at + 26,000 = +1,820,000
30 at -4000 = - 120,000
total = 1,700,000 for the 100 houses
so
17,000 profit per house