Professional Documents
Culture Documents
7 Profit: ($50,000,000-$200,000-$1,000,000)=$48,800,000
EMV: ($50,000,000-200,000-1,000,000)*0.1*0.7=3,416,000
0.1
EMV=$3,416,000+$1,104,000-$180,000=$4,340,000
Cost: -$200,000
0.9
EMV: -$200,000*0.9=-$180,000
0.9 Profit: ($3,750,000-$10,000-$60,000)=$3,680,000
EMV: ($3,750,000-$10,000-$60,000)*0.9*0.9=$2,980,800
0.9
Bidding EMV=$2,980,800+$137,700-$1,000=$3,117,500
0.1 Cost: -$10,000
EMV: -$10,000*0.1=-$1,000
I recommend that the executives pursue Event A in the bidding process, as it offers the
highest anticipated monetary value, amounting to $4,340,000. However, it's essential to
note that if the town fails to secure the bid, there will be a loss of $200,000. On the
Not bidding for positive side, winning the bid for Event A could result in either a significant benefit of
any event ($0) $48,800,000 for an excellent event or $36,800,000 for a mediocre event.
EMV=cost=$0
2. 0.7 Profit: ($50,000,000-$200,000-$1,000,000)=$48,800,000
EMV: ($50,000,000-200,000-1,000,000)*0.3*0.7=10,248,000
0.3
EMV=$10,248,000+$3,312,000-$140,000=$13,420,000
0.7 Cost: -$200,000
EMV: -$200,000*0.7=-$140,000
0.9 Profit: ($3,750,000-$10,000-$60,000)=$3,680,000
EMV: ($3,750,000-$10,000-$60,000)*0.9*0.9=$2,980,800
0.9
Bidding EMV=$2,980,800+$137,700-$1,000=$3,117,500
0.1 Cost: -$10,000
EMV: -$10,000*0.1=-$1,000
I recommend that the executives consider bidding for Event A, as it offers the
Not bidding for highest anticipated monetary value of $13,420,000. However, it's crucial to be
any event ($0) aware of the potential drawback: a loss of $200,000 if the bid is unsuccessful. On a
EMV=cost=$0 positive note, a successful bid for Event A could result in a benefit of either
$48,800,000 for an excellent event or $36,800,000 for a mediocre event.