The Cromwell Construction Company has the opportunity to enter into a contract to build a mountain road.The following table shows the probability distribution for the profit that could occur if it takes the contract:
Based on this information,the expected profit for the company if it takes the contract is $60,000.

Question

The Cromwell Construction Company has the opportunity to enter into a contract to build a mountain road.The following table shows the probability distribution for the profit that could occur if it takes the contract:
  Based on this information,the expected profit for the company if it takes the contract is $60,000.

Quizplus · Accepted Answer

To calculate the expected profit, we need to multiply the profit with their respective probabilities and add them. 
Expected Profit = (0.3)($30,000) + (0.4)($60,000) + (0.2)($80,000) + (0.1)($90,000) + (0.0)($100,000) 
Expected Profit = $18,000 + $24,000 + $16,000 + $9,000 + $0 
Expected Profit = $67,000, which means the expected profit is not $60,000. Therefore, the answer is B - False.

The Cromwell Construction Company Has the Opportunity to Enter into a Contract