Question

A private detective figures that he has a one in ten chance of recovering stolen property for his client. The expenses for the investigation will cost him $10,000, but the recovery
fee is $80,000.
Based ONLY on this information, should the private detective take the job?
The expected value is $1,000, so the detective should take the job.
The expected value is $2,000, so the detective should take the job.
The expected value is -$8,000, so the detective should not take the job.
The expected value is -$2,000, so the detective should not take the job.
ООО

Answer 1

Based on the information, it should be noted that the expected value is -$2,000, so the detective should not take the job.

From the information given, since there's one in ten chance of recovering

the stolen property and the recovery fee is $80000, then he'll have:

= 1/10 × $80000

= $8000

Since expenses cost $10000.

Expected value = $8000 - $1000

Expected value = -$2000.

Since there's no profit made, the expected value is -$2,000, so the detective should not take the job.

Read related link on:

https://brainly.com/question/24822605

Answer 2

The private detective shouldn't take the job because;

The expected value is -$2,000, so the detective should not take the job.

• This is an expected value problem where we want to know the anticipated value of an investment.

• Now, we are told that the probability of him recovering the stolen property for his client is; 1/10 = 0.1.

• If the recovery fee is $80,000, then the expected value on this based on the probability is; 0.1 × 80000 = $8000

• Now, the investigation will cost him $10,000 and so if he looses the case, then he will lose $10,000.

• Thus, the overall expected value = $8000 - $10000 = -$2000.

• Therefore the detective should not take the job.

Read more at; brainly.com/question/24305645