Dollar purchase that forecast using conditional probability

Reference no: EM13147875

Dollar Department Stores has received an offer from Harris Diamonds to purchase Dollars store on Grove Street for $120,000. Dollar is an expected-value maximizer. Dollar has determined probability estimates of the store"s future profitability, based on economic outcomes, as: P($80,000) = .2, P($100,000) = .3, P($120,000) = .1, and P($140,000) = .4. A. b. c. Should Dollar sell the store on Grove Street? What is the EVPI? Dollar can have an economic forecast performed. The forecast costs $10,000, and indicates either G = Good business or B = Bad business conditions with equal probability (that is, probability 0.5). Conditional probabilities of the indicators conditional on future profitability are P(G80,000) = .1; P(G 100,000) = .2; P(G120,000) = .6; P(G140,000) = .3. Should Dollar purchase that forecast?

Reference no: EM13147875

Questions Cloud

Internet to research criminal proceedings in one : Use the Internet to research criminal proceedings in one (1) of the six (6) model countries from the textbook. Imagine you are traveling abroad in your chosen country when you witness a local national committing a violent assault.

Describe how the system converges to its new equilibrium : Describe how the system converges to its new equilibrium. What happens to the equilibrium wage in the long run? What happens to the equilibrium population size in the long run?

Estimating the loss accrual : Neer Co. has a probable loss that can only be reasonably estimated within a range of outcomes. No single amount within the range is a better estimate than any other amount. The loss accrual should be:

Define chemical-plant equipment costs rarely vary : Chemical-plant equipment costs rarely vary in proportion to size. In the simplest case, cost C varies with size S according to the allometric equation 18 Chemical Engineering Thermodynamics C = ?S?

Dollar purchase that forecast using conditional probability : Conditional probabilities of the indicators conditional on future profitability are P(G80,000) = .1; P(G 100,000) = .2; P(G120,000) = .6; P(G140,000) = .3. Should Dollar purchase that forecast?

How many grams of potassium are present : how many grams of potassium are present in 13.6g of K2Cr2O7

What molar concentration of h2so4 solution : 18.25 ml of 0.197 M NaOH will neutralize 10.00 ml of what molar concentration of H2SO4 solution?

A week after debbie stopped taking her medication : A week after Debbie stopped taking her medication, she approached a neighbor, Mark, as he walked along the sidewalk fronting Jennifer's home. When she was face to face with Mark, Debbie, without provocation, gestured threateningly and screamed, "I kn..

Net realizable value of receivables : What amount of uncollectible accounts expense was reported on the income statement? What was the net realizable value of receivables at the end of the accounting period?

User Account

All Pages