A contractor has to decide whether to submit a bid for a construction project. It will cost $16,000 to prepare the bid. This cost would be incurred whether or not the bid was ac cepted. The contractor intends to bid at a level that will produce a $110,000 profit (less the cost of preparing the bid). The contractor knows that 20% of bids prepared in this way have been successful.

(a) Set up the payoff table.

(b) Should a bid be prepared and submitted, according to the expected monetary value criterion?

(c) Under what range of probabilities that the bid will be successful should a bid be pre- pared and submitted, according to the expected monetary value criterion?