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.

Question

Can someone help me with this.

Answer 1

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