An art dealer has a client who will buy the masterpiece

Reference no: EM13376495

An art dealer has a client who will buy the masterpiece Rain Delay for $50,000.

The dealer can buy the painting now for $40,000 (making a prot of $10,000). Alternatively, he can wait one day, when the price will go down to $30,000. The dealer can also wait another day when the price will be $25,000. If the dealer does not buy by that day, then the painting will no longer be available. On each day, there is a 0.60 chance that the painting will be sold elsewhere and will no longer be available.

(a) Draw the decision tree.Show the Expected Monetary Value at each step? What strategy maximizes the dealer's profit?

(b) What is the Expected Value of Perfect Information value the dealer would place on knowing when the item will be sold

(c) What strategy should be selected if the probability that the painting will be sold is changed to 0.50 from 0.60. Please draw the decision tree to come to the conclusion

Reference no: EM13376495

Questions Cloud

A bike is on a stand such that the highest point of the : a bike is on a stand such that the highest point of the back wheel is 47 inches above the ground. if the pedal is

A cat scan produces equally spaced cross-sectional views of : a cat scan produces equally spaced cross-sectional views of a human organ that provide information about the organ

Consider the 4 labeled points in the plane -1-1011-212 : consider the 4 labeled points in the plane -1-1011-212. points above the x-axis have y-labels 1 and points below the

The management of a software firm wishes to develop an : the management of a software firm wishes to develop an airline reservation system. in order to fulfill the contract

An art dealer has a client who will buy the masterpiece : an art dealer has a client who will buy the masterpiece rain delay for 50000.the dealer can buy the painting now for

The number of assists per match for the setter on your : the number of assists per match for the setter on your schools volleyball team has a mean of 58 and a standard

A retailer purchases a batch of 1000 fluorescent lightbulbs : a retailer purchases a batch of 1000 fluorescent lightbulbs from a wholesaler at a cost of 2 per bulb. the wholesaler

Pick six binary labeled points in the plane that are : pick six binary labeled points in the plane that are linearly seperable by a hyperplaneline. starting with a hyperplane

Consider the labeled points on the real line -21-1-10121 : consider the labeled points on the real line -21-1-10121. the second coordinate is the y-label. consider the family of

User Account

All Pages