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    Calculating expected profit in the given case

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    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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    Probability of winning the contract=p1=0.70
    Profit in case he ...

    Solution Summary

    Solution describes the steps to calculate contractor's expected profit in the given case.