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MMLU / Smith Legal Services has offered to represent a plaintiff in a lawsuit for a…

Problem

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question

Smith Legal Services has offered to represent a plaintiff in a lawsuit for a retainer of $20000 plus 40% of any award over $20000. Smith expects to incur out-of-pocket expenditures of 15000inlitigatingthesuit.Possiblecourtawardswiththeirassociatedprobabilitiesare:AwardProbability15000 in litigating the suit. Possible court awards with their associated probabilities are: Award Probability 100000 0.7 $0 0.3 What is the expected value to Smith of the lawsuit?
Plain-text mathematical notation (without MathML)
Smith Legal Services has offered to represent a plaintiff in a lawsuit for a retainer of $20000 plus 40% of any award over $20000. Smith expects to incur out-of-pocket expenditures of 15000inlitigatingthesuit.Possiblecourtawardswiththeirassociatedprobabilitiesare:AwardProbability100000 0.7 $0 0.3 What is the expected value to Smith of the lawsuit?
Original LaTeX notation
Smith Legal Services has offered to represent a plaintiff in a lawsuit for a retainer of $20000 plus 40% of any award over $20000. Smith expects to incur out-of-pocket expenditures of $15000 in litigating the suit. Possible court awards with their associated probabilities are: Award Probability $100000 0.7 $0 0.3 What is the expected value to Smith of the lawsuit?

choices

  1. $25,900
  2. $27,400
  3. $33,000
  4. 37000

subject

professional_accounting

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