Provide an Appropriate Response

question 36

Multiple Choice

Provide an appropriate response.
-A contractor is considering a sale that promises a profit of $26,000 with a probability of 0.7 or a loss (due to bad weather, strikes, and such) of $8000 with a probability of 0.3. What is the expected profit?

• A) $23,800
• B) $18,200
• C) $18,000
• D) $15,800

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Definitions:

Useful Life

The estimated period over which it is expected that an asset will be profitable or useful to its owner.

Units-Of-Activity

A depreciation method that allocates the cost of an asset over its useful life based on its actual usage or activity level.

Factory Machinery

Refers to the physical equipment used in the production process within a manufacturing facility.

Delivery Equipment

Assets such as trucks and vans that are used by a business to transport products to customers.