n with probability of 0.45, there is an ordinary sales level and profit is $3 million with 0.05 probability, there will be loss and it is -$4 million. There is a research company involves as a consultant to remove the uncertainty. The payment to
n with probability of 0.45, there is an ordinary sales level and profit is $3 million with 0.05 probability, there will be loss and it is -$4 million. There is a research company involves as a consultant to remove the uncertainty. The payment to
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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Question
If a company does not launch a new item to the market, there is no revenue for this.
However, if they launch a new item, the income status will be uncertain. There are 3 cased related probabilities. Those are:
with probability of 0.55, the sales will be very high and profit is $7 million
with probability of 0.45, there is an ordinary sales level and profit is $3 million
with 0.05 probability, there will be loss and it is -$4 million.
There is a research company involves as a consultant to remove the uncertainty. The payment to the researcher will be made when the sales figures come which will be at the end of a period of six months.
What the minimum payment will be to the researcher at the end of six months where the annual nominal interest is 10% ?
Please do fast ASAP fast
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