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building contra ontractors will b ractices, bids fm robability distrib

building contra ontractors will b ractices, bids fm robability distrib

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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2. A building contractor is preparing a bid on a new construction project. Two other contractors will be submitting bids for the same project. Based on past bidding practices, bids from the other contractors can be described by the following probability distributions: PROBABILITY DISTRIBUTION OF BID Uniform Probability Distribution between $600,000 and $800,000 Normal probability with a mean bid of $700,000 and a standard deviation of $50,000 CONTRACTOR A B a. If the building contractor submits a bid of $750,000, what is the probability that the building contractor will obtain the bid? Use an excel worksheet to simulate 1000 trials of the contract bidding process. b. The building contractor is also considering bids of $775,000 and $785,000. If the building contractor would like to bid such that the probability of winning the bid is about 0.80, what bid would you recommend? Repeat the simulation process with bids of $775,000 to justify your recommendation.
Transcribed Image Text:2. A building contractor is preparing a bid on a new construction project. Two other contractors will be submitting bids for the same project. Based on past bidding practices, bids from the other contractors can be described by the following probability distributions: PROBABILITY DISTRIBUTION OF BID Uniform Probability Distribution between $600,000 and $800,000 Normal probability with a mean bid of $700,000 and a standard deviation of $50,000 CONTRACTOR A B a. If the building contractor submits a bid of $750,000, what is the probability that the building contractor will obtain the bid? Use an excel worksheet to simulate 1000 trials of the contract bidding process. b. The building contractor is also considering bids of $775,000 and $785,000. If the building contractor would like to bid such that the probability of winning the bid is about 0.80, what bid would you recommend? Repeat the simulation process with bids of $775,000 to justify your recommendation.
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