Evaluation of the project success

Reference no: EM13968793

One of the most powerful people in Hollywood is not an actor, director, or producer. It is Richard Soames, an insurance director for the London-based Film Finances Ltd. Soames is a leading provider of movie completion bond guarantees. The guarantees are like insurance policies that pay the extra costs when ?lms go over budget or are not completed on time. Suppose that Soames is considering insuring the production of a movie and feels there is a 0.65 chance that his company will make $80,000 on the deal (i.e., the production will be on time and not exceed budget). He believes there is a 0.35 chance that the movie will exceed budget and his company will lose $120,000, which would have to be paid to complete production. Soames could pay a movie industry expert $5,000 for an evaluation of the project's success. He believes that the expert's conclusions are true 90% of the time. What should Soames do?

Reference no: EM13968793

Questions Cloud

Decision tree and the optimal decision : The company may test the potential of the rural market for a cost of $25,000. The test has a 90% reliability of correctly detecting the state of nature. Construct the decision tree and determine the optimal decision.

Assignment related to the quality of management : First assignment is requesting to develop an Abstract which must be submitted by end of this week to the tutor. However, the second assignment can be differed till submission within two weeks.

Probability of correctly detecting the state of nature : Testing the new idea on actual ?ights would cost $60,000, and the results would have a 0.85 probability of correctly detecting the state of nature. What should Swiss do?

Develop and test html document that has checkboxes for apple : Develop and test an HTML Document that has checkboxes for apple (59 cents each), oranges (49 cents each), and Banana (39 cents each), along with a submit button.

Evaluation of the project success : Soames could pay a movie industry expert $5,000 for an evaluation of the project's success. He believes that the expert's conclusions are true 90% of the time. What should Soames do?

What challenges consultants face : Identify three possible dissertation research topics related to the subject of the course. Discuss some of the problems or opportunities that each of these three studies addresses.

Handling additional information in a decision problem : 1. Explain why Bayes' theorem is necessary for handling additional information in a decision problem. 2. Explain the meaning of the term predictive probability.

Buyers and suppliers of commodities : Commodity futures provide an opportunity for buyers and suppliers of commodities such as wheat to arrange in advance sales of a commodity, with deliv- ery and payment taking place at a speci?ed time in the future.

How much will the alternative cost : What are the parts, processes, or pieces that can add value to the alliance or merger/ acquisition? What does the alliance do or what is it supposed to do?

User Account

All Pages