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7 February, 06:59

A construction company is planning to bid on a building contract. The bid costs the company $1700. The probability that the bid is accepted is 1/4. If the bid is accepted, the company will make $16,800 minus the cost of the bid. Find the expected value in this situation.

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  1. 7 February, 08:09
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    The expected value in this situation is $2075.

    Step-by-step explanation:

    Given dа ta:

    The cost of the bid = $1700

    The probability that bid is accepted is = 1/4

    If the bid is accepted then company will make = $16,800 - $1700

    If the bid is accepted then company will make = $15,100

    Expected Value in this situation = ?

    Solution:

    The given condition is expressed by the following mathematical expression:

    Expected Value = 1/4 (15,100) - 1700

    Expected Value = 3775 - 1700

    Expected Value = $2075
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