Belt Auction

An architect is considering bidding for the design of a new museum. The cost of drawing plans and submitting a?

An architect is considering bidding for the design of a new museum. The cost of drawing plans and submitting a model is $13,000. The probability of being awarded the bid is 0.1, and anticipated profits are $130,000, resulting in a possible gain of this amount minus the $13,000 cost for plans and a model. What is the expected value in this situation? Round your answer to the nearest dollar.

Public Comments

1. loses bid: -13,000*0.9 = (-)$11,700 wins bid: 130,000*0.1 - 13000 = $0 E[x] = (-)$11,700 <--------