A company bids on two contracts.It anticipates a profit of $70,000 if it gets the larger contract and a profit of $40,000 if it gets the smaller contract.It estimates that there's a 30% chance of winning the larger contract and a 50% chance of winning the smaller contract.Find the company's expected profit.Assume that the contracts will be awarded independently.
A)$41,000
B)$57,500
C)$112,500
D)$47,000
E)$24,500

Question

Quizplus · Accepted Answer

Expected profit = (Profit from larger contract * Probability of winning larger contract) + (Profit from smaller contract * Probability of winning smaller contract)= (70,000 * 0.3) + (40,000 * 0.5)= 21,000 + 20,000= $41,000

A Company Bids on Two Contracts