Explore BrainMass
Share

Explore BrainMass

    Expected Value of Perfect Information

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    A business owner is trying to decide whether to buy, rent, or lease office space and has constructed the following payoff table based on whether business is brisk or slow.
    Alternative Brisk Slow
    Buy 90 -10
    Rent 70 40
    Lease 60 55

    If the probability of brisk business is .40 and for slow business is .60, determine the expected value of perfect information is:

    a) 12
    b) 55
    c) 57
    d) 69

    Please see the attached.

    © BrainMass Inc. brainmass.com April 3, 2020, 6:06 pm ad1c9bdddf
    https://brainmass.com/statistics/central-tendency/expected-value-of-perfect-information-193482

    Attachments

    Solution Preview

    A business owner is trying to decide whether to buy, rent, or lease office space and has constructed the following payoff table based on whether business is brisk or slow. ...

    Solution Summary

    The solution calculates expected value of perfect information.

    $2.19

    ADVERTISEMENT