CONTRACT PROFIT, (P)*
OF PROFIT...(P)*. TO BREAK EVEN...LOSS, (P)* OF LOSS
Southeast $45,000, 50% 30% $6,000, 20%
Southwest $60,000, 35% 40% $10,000, 25%
California $112,000, 20% 40% $40,000, 40%
I think that the best contract would be with SOUTHEAST. It probability of having a profit is higher than the other two at 50% while its probability of incurring a loss is lesser than the other two at 20%.
Despite the bigger value of its contract profit of the other two, these value will still be greatly affected by its corresponding probabilities.
