# calculate the expected net profit

Information I have gathered from the problem. I have a new product that has a probability .5 of being a success and probability .5 of being unsuccessful. Sucessful products pass quality control 80% of the time. Unsuccessful products pass quality control 25% of the time.

If the product is successful the net profit for the company would be $40 million; if unsuccessful the net loss would be $15 million. How do I calculate the expected net profit if the product passes quality control?

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#### Solution Preview

We have the following assumptions.

A: A product is successful.

B: A product passes quality control.

~A means "Not A" and ~B means "Not B".

From the ...

#### Solution Summary

This posting guides to calculate the expected net profit.

Calculate contractor's expected net profit.

A building contractor pays $500 to bid on a contract. If he gets the contract, the probability of which he estimates to be 0.70, he will make a profit of $50,000. On the other hand, if he does not get the contract, he forfeits his $500. Find the contractor's expected net profit.

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