Consultant for the information

Assignment Help Business Economics

Reference no: EM138224

Q. Jo Thomkins ought to make a decision whether or not to proceed with a particular investment project. If the project succeeds, Jo will gain $15 million. If there is a failure in project, she will lose $3 million. Jo estimates that there is a 20% chance that the project will succeed and an 80% chance that it will fail.

A consultant could tell Jo with certainty if the project will succeed or fail, but only for a fee. What is the most that Jo should be willing to pay the consultant for the information? Explain.

Suppose that Jo has correctly estimated the probabilities of the project's likely success and failure.

Reference no: EM138224

Questions Cloud

Maximize the total surplus of all transactions : If you match up pairs of buyers and sellers so as to maximize the total surplus of all transactions, what is the largest total surplus that can be achieved.

Accumulation of inventories worldwide : Rusal believed the price of aluminum would fall because of the growing accumulation of inventories worldwide.

An existing company is considering expanding : An existing company is considering expanding into a new product line that will use the same factory as its existing products.

Maintain a claim for sexual harassment : Explain what Alice must prove in order to maintain a claim for sexual harassment and constructive discharge.

Consultant for the information : What is the most that Jo should be willing to pay the consultant for the information.

Inflation is currently stable : If the nominal social discount rate is 7% and the rate of inflation is currently stable at 2 percent, should the city build either facility.

Most likely to use this currency : Suppose instead that use of the Sonoma county buy local currency is completely voluntary. Who is the most likely to use this currency.

Decrease consumer surplus and producer surplus : Explain how the reduction in supply from the reduced fishing waters will either increase or decrease consumer surplus and producer surplus.

Government requires insurance : What kinds of people are most likely to have their utility reduced by such a law. Why do you think that the government requires such insurance.

User Account

All Pages