A Company Bids on Two Contracts

question 205

Multiple Choice

A company bids on two contracts.It anticipates a profit of $70,000 if it gets the larger contract and a profit of $40,000 if it gets the smaller contract.It estimates that there's a 30% chance of winning the larger contract and a 50% chance of winning the smaller contract.Find the company's expected profit.Assume that the contracts will be awarded independently.

• A)$41,000
• B)$57,500
• C)$112,500
• D)$47,000
• E)$24,500

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Definitions:

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