Expected monetary value as your decision criterion

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Jason is considering building a restaurant near the campus. One set of business plans he is considering involves inclusion of a bar for beer sales; the other plan would not provide for beer sales. In either case, Jason believes her chance of success to be .7 (and the chance of failure .3). Analysis indicates that including the bar would yield $325,000, and without the bar $250,000. Failure with the bar would result in a loss of $70,000; whereas without the bar, failure would result in a loss of $20,000. Select the alternative for Julie, using the expected monetary value as your decision criterion. Should Jason's business plan include bar sales? Support your recommendation.

Reference no: EM131142832

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