Consider a construction firm that is deciding to specialize in building high schools or elementary schools or a combination of both over the long haul. The construction company must submit a bid proposal, which costs money to prepare, and there are no guarantees that it will be awarded the contract. If the company bids on the high school, it has a 35% chance of getting the contract, and it expects to make $162,000 net profit. However, if the company does not get the contract, it loses $11,500. If the company bids on the elementary school, there is a 25% chance of getting the contract, and it would net $140,000 in profit. However, if the company does not get the contract, it will lose $5750. What should the construction company do?

Answer rating: 100% (QA)

Answer Solution Step 1 Suppose there are 35 chances that the company gets the contract for ... View the full answer