the total cost is lost with a 15% probability is: $ 20,000 + $ 3,000 + $ 3.0000 = $ 53,000 expected cost of option 1 is: 0.5 * $ 20,000 + 0.35 * $ 21,000 + 0.15 * $ 53,000 = $ 25,700
The total cost is lost with a probability of 15% is: $ 20,000 + $ 3,000 + $ 3.0000 = $ 53,000 Cost expectations option 1 is: 0.5 * $ 20,000 + 0.35 * $ 21,000 + 0.15 * $ 53,000 = $ 25,300