Dylan is going to invest in an account paying an interest rate of 4.1% compounded continuously. How much would Dylan need to inv
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Answer:
a.
b.
c.
d.
Step-by-step explanation:
The probability that the company won x bids follows a binomial distribution because we have n identical and independent experiments with a probability p of success and (1-p) of fail.
So, the PMF of X is equal to:
Where p is 0.1 and it is the chance of winning. Additionally, n is 3 and it is the number of bids. So the PMF of X is:
For binomial distribution:
Therefore, the company can expect to win 0.3 bids and it is calculated as:
Additionally, the standard deviation of the number of bids won is:
Finally, the probability to won 1, 2 or 3 bids is equal to:
So, the expected profit for the company is equal to:
Because there is a probability of 0.243 to win one bid and it will produce 50,000 of income, there is a probability of 0.027 to win 2 bids and it will produce 100,000 of income and there is a probability of 0.001 to win 3 bids and it will produce 150,000 of income.