Question

Based on past experience, a building contractor sets the

Answer 1

Based on the cost of the contract and the probability to win it, the total expected value of the contract proposal is -$2500.

How to calculate the expected value of a contract proposal?

The general formula to calculate the expected value is:

• Expected value: possibility of winnind the contract x the amount when winning - possibility of loing the contract x possible loss

• Possibility of winning the contract= 0.10
• Possibility of losing the contract = 0.90
• Gain: $65000
• Loss: $10000

What is the expected value of the contract?

• Expected value: 0.10 x 65000 - 0.90 x 10000
• Expected value: 6500 - 9000
• Expected value: -$2500

Learn more about contract in: brainly.com/question/2669219

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