A contractor is considering a sale that promises a profit of $ 26,000 with a probability of .7 or a loss (due to bad weather, strikes, and such) of $ 4000 with a probability of .3. What is the expected profit.

Can someone help me with this.

To calculate the expected profit, we first find the expected value of each outcome by multiplying each profit or loss by its respective probability.

Expected profit from a sale with a profit of $26,000 and a probability of 0.7:
26,000 * 0.7 = $18,200

Expected loss from a loss of $4,000 and a probability of 0.3:
4,000 * 0.3 = $1,200

To get the expected profit, we subtract the expected loss from the expected profit:
Expected profit = Expected profit - Expected loss
Expected profit = $18,200 - $1,200
Expected profit = $17,000

Therefore, the expected profit is $17,000.

To find the expected profit, multiply the profit of each outcome by its respective probability, and then add them together.

In this case, the profit of $26,000 has a probability of 0.7, and the profit of -$4,000 has a probability of 0.3.

Expected Profit = (Prob of profit * profit) + (Prob of loss * profit)
= (0.7 * $26,000) + (0.3 * -$4,000)

Calculating the expected profit:

Expected Profit = (0.7 * $26,000) + (0.3 * -$4,000)
= $18,200 - $1,200

Therefore, the expected profit is $17,000.

Say he builds 100 houses with these ground rules

70 at + 26,000 = +1,820,000
30 at -4000 = - 120,000
total = 1,700,000 for the 100 houses
so
17,000 profit per house