Bid costs company 1300 the probability that the bid is accepted is 1/10. If accepted the company will make 48000 minus the cost of the bid what is the expected value
First, calculate the profit the company would make if the bid is accepted:
Profit = $48,000 - $1,300 = $46,700
Next, calculate the expected value of the bid:
Expected Value = Probability of Acceptance * Profit
Expected Value = (1/10) * $46,700
Expected Value = $4,670
Therefore, the expected value of the bid for the company is $4,670.