The management of a mining company must decide whether to cintinue an operation at a certain location. if they continue and are successful, they will make a profit of $4,500,000. If they continue and arent successful, they will lose $2,700,000. if they do not continue but would have been successful if they had continued, they will lose $1800000 (for competitive reasons) and if they do not continue and would not have been successful if they have had continued, they will make a profit of $450,000 (because funds allocated to the operation remain unspent) what decision would maximize the companys expected profit if it is felt that there is a fifty fifty chance for success?
A contractor must choose between two jobs. The first promises a profit of $120,000 with a probability of 3/4 or a loss of 30,000 (due to strikes and other delays) with a probability of 1/4. The second job promises a profit of $180,000 with a probability of 1/2 or a loss of $45,000 with a probability of 1/2. Which job should the contractor choose so as to maximize his expected profit?