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4 November, 21:02

9. A contractor is considering a sale that promises a profit of $27,000 with a probability of 0.7 or a loss (due to bad weather, strikes, and such) of $12,000 with a probability of 0.3. What is the expected value?

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  1. 4 November, 22:34
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    Hence the expected value for the contractor for sales is 15,300 $.

    Step-by-step explanation:

    Given:

    Winning $27000 is 0.7 and losing 12000 $ of it about 0.3

    To find:

    Expected value for the contractor for sales.

    Solution:

    Th expected value is the average occurred of the event.

    {Suppose

    a series of number like 10,30,30,30,30,60,78.

    for this expected value will be

    (10+30+30+30+30+60+78+78) / 8

    =10 (1/8) + 30 (4/8) + 60 (1/8) + 78 (2/8).

    78,10,30 and 60 are just like cost and 1/8,4/8,2/8 are probabilities of respective cost.

    }

    Similar for given values

    Expected value with probability is =

    Winning probability * cost of winning + (-losing probability * losing cost)

    losing means negative impact on value so it is negative

    =27000*0.7-12000*0.3

    =18900-3600.

    =15300 $.
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