Which contract offers the greater expected profit

Reference no: EM13242775

A firm supplies aircraft engines to the government and to private firms. It must decide between two-mutually-exclusive-contracts.

If it contracts with a private firm; its profit would be $2 million, $0.7 million, or -$0.5 million with probabilities 0.25, 0.41, and 0.34, respectively.

If it contracts with the government, its profit will be $4 million or -$2.5 million with receptive probabilities 0.45 and 0.55.

Which contract offers the greater expected profit?

Reference no: EM13242775

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