Explanation 1) Definition: Assume that an experiment has outcomes numbered 1 to n with probabilities P 1 , P 2 , P 3 , ... P n . Assume that each outcome has a numerical value associated with it and these are labeled V 1 , V 2 , V 3 , ... V n . The expected value of the experiment is ( P 1 ⋅ V 1 ) + ( P 2 ⋅ V 2 ) + ( P 3 ⋅ V 3 ) + ... + ( P n ⋅ V n ) . 2) Calculation: Given, A company estimates that it has a 40% change of being successful in bidding on a $35000 contract consultant fees to prepare the bid is $2000 (i.e.) the probability of getting success is P ( E ) = 60 % = 40 100 = 0

6th Edition

ISBN: 9780134434681

Author: Tom Pirnot

Publisher: PEARSON

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Chapter 13.4, Problem 32E

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The expected gain or loss of the company that it has a 40% chance to obtain a contract for $35,000. If it will cost $2,000 to prepare the bid and it’s decide to bid on the contract.

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Chapter 13.4, Problem 31E

Chapter 13.4, Problem 33E

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The expected gain or loss of the company that it has a 40% chance to obtain a contract for $35,000. If it will cost $2,000 to prepare the bid and it’s decide to bid on the contract.

Solution Summary: The author analyzes the probability of a company bidding on 35000 contract consultant fees. The expected gain or loss is 12000 and it's not enough to bid.

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To find: The expected gain or loss of the company that it has a 40% chance to obtain a contract for $35,000. If it will cost $2,000 to prepare the bid and it’s decide to bid on the contract.

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Chapter 13 Solutions

To find:

The expected gain or loss of the company that it has a 40% chance to obtain a contract for $35,000. If it will cost $2,000 to prepare the bid and it’s decide to bid on the contract.