a construction company is planning to bid on a buildinh contract. The bid cost the company $1400.00. The probability that all the bid accepted is 1/4. If the bid is accepted the company will make $31,600 minus the cost of the bid.

What is your question?

how to set problem up?

To determine the expected value of the bid, we need to calculate the probability of the bid being accepted and the potential profit if it is accepted.

First, let's calculate the expected probability of the bid being accepted. The given probability is 1/4, which means there is a 1 in 4 chance of the bid being accepted.

To calculate the expected profit, we subtract the cost of the bid from the potential profit the company can make: $31,600 - $1,400 = $30,200.

Now, we can calculate the expected value by multiplying the probability of the bid being accepted by the potential profit: (1/4) * $30,200 = $7,550.

Therefore, the expected value of the bid is $7,550. This means that, on average, the company can expect to make $7,550 for each bid they submit, taking into account both the probability of acceptance and the potential profit.