Reference no: EM132972814

A television network earns an average of $65 million each season from a hit program and loses an average of $25 million each season on a program that turns out to be a flop. Of all programs picked up by this network in recent years, 30% turn out to be hits; the rest turn out to be flops. At a cost of C dollars, a market research firm will analyze a pilot episode of a prospective program and issue a report predicting whether the given program will end up being a hit. If the program is actually going to be a hit, there is a 65% chance that the market researchers will predict the program to be a hit. If the program is actually going to be a flop, there is only a 40% chance that the market researchers will predict the program to be a hit.
A. What is the maximum value of C that the network should be willing to pay the market research firm? If needed, round your answer to three decimal digits.
$_______ million
B. Calculate and interpret EVPI for this decision problem. If needed, round your answer to one decimal digit.
The EVPI indicates that no information is worth more than $_______ million to the television network.