77 The following payoff table provides profits basedon various possible decision alternatives and various levels ofdemand at Robert Klassan's print shop:DEMANDLOWHIGHAlternative 1$10,000$30,000Alternative 2$ 5.000$40,000WhicAlternative 3-$2,000$50,000payoThe probability of low demand is 0.4, whereas the probability ofhigh demand is 0.6.a) What is the highest possible expected monetary value?b) What is the expected value with perfect information (EVWPI)?c) Calculate the expected value of perfect information for thissituation, Pxin prdepahowoperaagerand

I solved all three questions as one part.

Answered: DEMAND LOW HIGH Alternative 1 $10,000 $…

Advanced Engineering Mathematics

10th Edition

ISBN:9780470458365

Author:Erwin Kreyszig

Publisher:Erwin Kreyszig

Chapter2: Second-order Linear Odes

Section: Chapter Questions

Problem 1RQ

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A payoff table is given as (payoffs = profits) If the probabilities of s1, s2, and s3 are .2, .4, and .4, respectively, then what decision should be made under expected value? What is the EVPI? Please answer clearly.
Amount of claim (to nearest $20,000) Probability $0 0.70 $20,000 0.17 $40,000 0.06 $60,000 0.04 $80,000 0.02 $100,000 0.01 A. Calculate the expected value? B. How much should the company charge as an average premium so that it breaks even on its claim costs? C. How much should the company charge to make a profit of $50 per policy?
A community youth group is having a raffle to raise funds. Several community businesses have donated prizes. The prizes and their retail values are listed in the table below. Each prize will be given away, regardless of the number of raffle tickets sold. Tickets are sold for $19 each. Determine the expected value of a ticket, and discuss whether it would be to your financial advantage to buy a ticket under the given circumstances. (Enter your answers to two decimal places.) Prize Retail Value Number of ThesePrizes to BeGiven Away new car $21,510 1 a cell phone and a one-year subscription $970 1 a one-year subscriptionto an Internet serviceprovider $600 2 dinner for two ata local restaurant $130 2 a one-year subscriptionto the local newspaper $180 20 (a) 1000 tickets are sold.$ Should you buy a ticket? Yes/No (b) 2000 tickets are sold.$ Should you buy a ticket? Yes/No (c) 3000 tickets are sold.$ Should you buy a ticket? Yes/No
Payoffs in this lottery are given by the following: p(x) $100 .15 $60 .25 $20 .10 $10 .30 $40 .20 a) Find this lottery's expected value b) Find the probability that a person will win more than $20.
Sta 6. Fair Games and Expected Value: Game 1 nged st A game is said to be fair if the expected value (after considering the cost) is 0. This would mean that in the long run, both the player and the "house" or whoever is putting on the game, would expect to win nothing. If the value is positive, the game is in your favor. If the value is negative, the game is not in your favor. At a carnival, you pay $1 to choose a card from a standard deck. If you choose a red card you double your money, but if you pick a black card you do not get any. (A standard deck of cards has 52 card. 26 of the cards are red.) Exp ut of • • • • •2 Con 144 144 44 144 14 10 * * +* + +* t * Less • •: Finish at 1. Complete the probability distribution below. P(x) Color of card x → Net Money Won or Lost $4 Red $4 Black Click to view hint 2. What is the expected value? u hint
Payoffs in this lottery are given by the following:x p(x)$100 .15$60 .25$20 .10$10 .30$40 .20a) Find this lottery’s expected value _________________b) Find the probability that a person will win more than$20._______________________________
Fire Insurance Amari's family is moving to California and would like to purchase fire insurance. The insurance company is offering them a plan with an annual premium of $450. If there is a fire that damages the home, the insurance company will pay $250,000. It is estimated that the probabilty of a fire in your area is 0.0008. What is the expected value of the policy? If an insurance company is able to sell 20,000 of these policies, how much can the company expect to earn?
14??
Expected Value: Life Insurance Jim is a 60-year-old Anglo male in reasonably good health. He wants to take out a $50,000 term (i.e., straight death benefit) life insurance policy until he is 65. The policy will expire on his 65th birthday. The probability of death in a given year is provided by the. Vital Statistics Section of the Statistical Abstract of the United Stales (116th edition). We're living longer now! Up-to-date information can be found in the Actuarial Life Table on the Social Security Administration web site. x= age 60 61 62 63 64 p(death at this age ) 0.01191 0.01292 0.01396 0.01503 0.01613 Jim is applying to Big Rock Insurance Company for his term insurancepolicy.(a) What is the probability that Jim will the in his 60th year? Using this probability and the $50,000 death benefit, what is the expected cost to Big Rock Insurance?(b) Repeat part (a) for years 61,62,63, and 64. What would be the total expected cost to Big Rock Insurance over the years 60 through…
Regarding expected BCA and the example of climate change, O a. reducing greenhouse gases now can be thought of as cheap insurance to rule-out the possibility of a low probability, but very high damages contingency. O b.uncertainty is excellent economic excuse for inaction. Oc the expected net benefits of reducing greenhouse gases are negative since there is a high probability that the costs outweigh the benefits. O d.using a larger discount rate increases the expected net benefits.
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