A contractor is considering a sale that promises a profit of $20,000 with a probability of .7 or a loss ( due to bad weather, strikes, and such) of $3000 with a probability of .3. What is the expected profit?
a. 13,100
b. 17,000
c. 14,000
d. 16,100
1 answer
expected value of profit= .7*20,000 -.3*3000