Part 5: Decision Trees A profit-maximizing firm is considering whether to make an investment of $50,000. If the investment succeeds, the firm will get 100,000 minus the original investment (for a profit of $50,000). If the investment fails, the firm will get $0, for a profit of -$50,000. The probability the investment will succeed is 90%. The firm can buy a test that is equally likely to tell the firm that the probability of success is either 100% or 80% and make a decision based on that test. What is the firm's willingness to pay for this test?

Part 5: Decision Trees A profit-maximizing firm is considering whether to make an investment of $50,000. If the investment succeeds, the firm will get 100,000 minus the original investment (for a profit of $50,000). If the investment fails, the firm will get $0, for a profit of -$50,000. The probability the investment will succeed is 90%. The firm can buy a test that is equally likely to tell the firm that the probability of success is either 100% or 80% and make a decision based on that test. What is the firm's willingness to pay for this test?

Name: QUESTION 25Part 5: Decision TreesA profit-maximizing firm is consider
Uploaded: 2024-03-20T07:06:41.000Z
Channel: Bartleby
Description: QUESTION 25Part 5: Decision TreesA profit-maximizing firm is considering whether to make an investment of $50,000. If the investment succeeds, the firm will get 100,000minus the original investment (for a profit of $50,000). If the investment fails,

MATLAB: An Introduction with Applications

6th Edition

ISBN:9781119256830

Author:Amos Gilat

Publisher:Amos Gilat

Chapter1: Starting With Matlab

Section: Chapter Questions

Problem 1P

See similar textbooks

Similar questions

To generate leads for new business, Gustin Investment Services offers free financial planning seminars at major hotels in Southwest Florida. Gustin conducts seminars for groups of 25 individuals. Each seminar costs Gustin $3,400, and the commission for each new account opened is $4,900. Gustin estimates that for each individual attending the seminar, there is a 0.01 probability that he/she will open a new account. Determine the equation for computing Gustin's profit per seminar, given static values of the relevant parameters. Profit =(New accounts opened x _______)-_________ Construct a simulation model to analyze the profitability of Gustin's seminars. Would you recommend that Gustin continue running the seminars? (Use at least 1,000 trials. Round your answer to two decimal places.) What is the minimum number of attendees (in a multiple of five, i.e., 25, 30, 35, …) that Gustin needs before a seminar's average profit is greater than zero? =______ attendees
A charity institution will organize a mini outdoor concert for a cause. The estimated cost of the mini concert is P80, 000 which includes the advertising, production, talent fees and security. The organizers expect to gather a profit of P 100, 000 if all goes well. However, according to the weather report, there is 40% chance of rain on the scheduled date of the concert. If it rains, the outdoor concert will have to be canceled. What is the organizer’s expected profit?
Charlie buys a one-year term home insurance policy for $p, that will pay $200,000 in the event of a major catastrophe and $35,000 in the event of a minor catastrophe. Charlie's home has a 0.2% chance of a major catastrophe and a 0.7% of a minor catastrophe during the one year term. What did the insurance company charge Charlie for this policy if the company expected to break even?
Q4/ If you following know the equation of the probability of acceptable by defective percent is shown as Pr(A) (1-P) [1+ 18 P+ 142 P ] Find the PR producer risk in defective percent 5%.
The map below shows the percentage change in housing prices from June 2014 to June 2015 in each of nine regions (U.S. Census divisions).+ Pacific 7.68 Mountain 7.17 West North Central 3.91 West South Central 6.92 East North Central 4.51 East South Central 4.88 Middle Atlantic 1.72 South Atlantic 6.12 New England 3.18 by You are choosing a region of the country to move to. Let E be the event that the region you choose saw a increase in housing prices of 4% or more, and let F be the event that the region you choose is on the east coast. Describe the event of EU F in words. You choose a region that saw an increase in housing prices of 4% or more or is on the east coast. You choose a region that saw a increase in housing prices of 4% or more and is on the east coast. List the outcomes of E UF. OEUF = {Pacific, Mountain, South Atlantic} EUF = {East North Central, South Atlantic, West North Central, Mountain, Pacific} EUF = {New England, Middle Atlantic, East North Central} EUF = {East North…
snip
Dystopia county has three bridges. In the next year, the Elder bridge has a 10% chance of collapse, the Younger bridge has a 2% chance of collapse, and the Ancient bridge has a 16% chance of collapse. What is the probability that exactly one of these bridges will collapse in the next year? (Round your final answer to four decimal places. Do not round intermediate calculations.)
Scenario: Album Sales: A study was done to see whether getting radio airtime and spending money on advertisements accurately predicts the number of album copies sold. A random sample of 200 artists’ albums were tracked on the number of times their songs play on the central radio station, how much money (in thousands) they spent on advertisements, as well as the number (in thousands) of album copies were sold. A record company wanted to determine if there was a positive relationship between album sales and the other two variables (money spent on advertisements and number of albums sold) What is the Null and alternative hypotheses (based on context of study) in symbols and words:
How do you solve this?
At a county fair, the chance of winning a game is 5% and the prize is a huge stuffed animal. Does that mean that if you play the game 100 times, you will win five of those huge stuffed animals? Explain your thinking.