Answered: 4. Using the following table, calculate…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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4. Using the following table, calculate the Expected Monetary Value (EMV), Expected Opportunity Loss (EOL), and Expected Value of Perfect Information (EVPI). Use the .50 for the probability of a Good Economy and .50 for the probability of a Poor Economy. Show your selections (highlight your best alternative). Show the work on an excel file.

	STATE OF NATURE
DECISION ALTERNATIVE	GOOD ECONOMY	POOR ECONOMY
Sotck market	80,000	-20,000
Bonds	30,000	20,000
CDs	23,000	23,000

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Step 1: Define the given problem:

Given,

	STATE OF NATURE
DECISION ALTERNATIVE	GOOD ECONOMY	POOR ECONOMY
Stock market	80,000	-20,000
Bonds	30,000	20,000
CDs	23,000	23,000
Probability	0.5	0.5

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