A contractor is to bid on one of two construction projects, Project A or Project B....

 

Transcribed Image Text:

A contractor is to bid on one of two construction projects, Project A or Project B. If the firm wins project A, its estimated profit is $2,000,000; if the firm wins project B, the estimated profit is $3,000,000. The cost of putting the bid together for the projects is $200,000 for A and $250,000 for B. Due to a difference in the number of qualified competitors, the firm estimates its probability of getting Project A as 0.7 and its probability of getting Project B as 0.5. Should the firm bid for A or B? (Hint: compare the expected profits for the bids.) Estimated. Profit Cost to Bid Probability of Winning Net Profit Expected Profit Project A Project B A contractor is to bid on one of two construction projects, Project A or Project B. If the firm wins project A, its estimated profit is $2,000,000; if the firm wins project B, the estimated profit is $3,000,000. The cost of putting the bid together for the projects is $200,000 for A and $250,000 for B. Due to a difference in the number of qualified competitors, the firm estimates its probability of getting Project A as 0.7 and its probability of getting Project B as 0.5. Should the firm bid for A or B? (Hint: compare the expected profits for the bids.) Estimated. Profit Cost to Bid Probability of Winning Net Profit Expected Profit Project A Project B

Answer rating: 100% (QA)

Based on the above information the firm should bid for Project B Heres a breakdown of the ex... View the full answer