Question

an architect is considering bidding for the design of a new museum. the cost of drawing plans and submitting a model is $15,000. the probability of being awarded the bid is 0.1. if the architect is awarded the bid, she will make $150,000 minus the $15,000 cost for plans and a model. complete parts a. through b. below.
a. what is the expected value in this situation?
$ (round to the nearest dollar.)

Explanation:

Step1: Calculate the profit if the bid is won

If the bid is won, the profit is \(150000 - 15000=\$135000\)

Step2: Calculate the profit if the bid is lost

If the bid is lost, the profit is \(-\$15000\) (a loss of the cost)

Step3: Use the expected - value formula

The expected - value formula is \(E(X)=\sum_{i = 1}^{n}x_ip_i\). Here, \(n = 2\), \(x_1 = 135000\), \(p_1=0.1\), \(x_2=-15000\), \(p_2 = 1 - 0.1=0.9\)

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Answer:

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