A small company has the technology to develop a new personal data assistant (PDA), but it worries about sales in the crowded market. They estimate that it will cost $600,000 to develop, launch, and market the product. Analysts have produced revenue estimates for three scenarios: If sales are high, they will sell $1.2M worth of the phones; if sales are moderate, they will sell $800,000 worth; and if sales are low, they will sell only $300,000 worth. Construct a payoff table for this set of actions using net profit as the “payoff.” Don’t forget the possible action of doing nothing.
Answer to relevant QuestionsAfter a series of extensive meetings, several of the key decision makers for a small marketing firm have produced the following payoff table (expected profit per customer) for various advertising strategies and two possible ...An analyst for the company in Exercise 12 thinks the probabilities of high, moderate, and low sales are 0.2, 0.5, and 0.3, respectively. In this case calculate the expected value of each action. Which is the best action in ...For the energy investment of Exercise 22 and using both of the probabilities considered in that exercise, find the Expected Value of Perfect Information. In exercise An investment bank is thinking of investing in a start-up ...An investor is considering adding a stock to her portfolio. Assuming she buys 100 shares, here is an estimated payoff table for the alternative stocks if she holds onto them for six months. The value of the stock depends on ...For the probabilities of Exercise 7 and the cost matrix of Exercise 3, using the expected values you found in Exercise 7, compute the standard deviation of values associated with each action and the corresponding coefficient ...
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