Simplified Micro Devices has a contract to sell 10,000 mousetraps to the Department of Defense (DOD). The mousetraps will sell for $5.50 apiece. However, there is a 20 percent probability that total expenses will be $40,000 and an 80 percent probability that total expenses will be $50,000. What is the expected pretax income for the firm's DOD sales?
$7,000
$48,000
$55,000
None of the above.