A contractor is considering a sale that promises a profit of 26,000 with a probability of 0.7 or a loss (due to bad weather strikes, and such) of $8000 with a probability of 0.3. What is the expected profit?

A. $15,800
B. $23,000
C. 18,000

How do I solve this?

Question

contestada

Respuesta :

TaeKwonDoIsDead TaeKwonDoIsDead · Answer 1 · 2019-10-14T18:57:17+02:00

Answer:

A

Step-by-step explanation:

The expected profit would be the sum of all the possibility multiplied. It means,

"We need to multiply the profit by its possibility and add it with the product of the loss and its possibility."

This will be the expectation, or expected profit.

Let's do it:

Expected Profit = [tex](26,000)(0.7) + (-8000)(0.3) = 15,800[/tex]

The correct answer is A

Answer Link

Parrain Parrain · Answer 2 · 2021-10-22T12:06:16+02:00

The expected profit assuming those probabilities of profit and loss is A. $15,800.

The expected profit will be a weighted average of the amount that can be made in the event that there is a profit or a loss.

The expected profit is calculated by the formula:

= (Amount made if profit x Probability of profit) + (Amount lost if loss x Probability of loss)

Solving gives us:

= (26,000 x 0.7) + (-8,000 x 0.3)

= 18,200 + (-2,400)

= 18,200 - 2,400

= $15,800

In conclusion, the expected profit is $15,800.

Find out more at https://brainly.com/question/13038906.