A) What would be the expected value of perfect information on the outcome of the research effort?

B) What would be the expect value of perfect information on the outcome of the development effort?

C) A contractor has offered to provide you with additional information to make a more informed decision. What information would you ask this contractor for, and what price would you be willing to pay? How would you use that information once it is received?

 

Transcribed Image Text:

TreePlan Student License 5 1,928,800 G No Funding 0 Funding 0 $ (300,000) $ 1,928,800 0.8 Research Succesful $ 0.2 Research Failed $ $ 1,986,000 2,000,000 $1,700,000 Develop Product 5 (800,000) $ 1,986,000 Sell Research $ 200,000 $ (100,000) 0.35 Development Failed $ 0.65 200,000 $ (900,000) Development Succesful 0 $3,540,000 G Sell Developed Product $ 1,000,000 $ (100,000) Market Developed Product $ (200,000) $ 3,540,000 0.3 High Market Response $8,000,000 $6,700,000 05 Medium Market Response $4,000,000 $2,700,000 02 Low Market Response $2,200,000 $ 900,000 For Education Only $ $ As S As $ $ 0 (900,000) (100,000) 6,700,000 2,700,000 900,000 (100,000) 1,700,000 TreePlan Student License 5 1,928,800 G No Funding 0 Funding 0 $ (300,000) $ 1,928,800 0.8 Research Succesful $ 0.2 Research Failed $ $ 1,986,000 2,000,000 $1,700,000 Develop Product 5 (800,000) $ 1,986,000 Sell Research $ 200,000 $ (100,000) 0.35 Development Failed $ 0.65 200,000 $ (900,000) Development Succesful 0 $3,540,000 G Sell Developed Product $ 1,000,000 $ (100,000) Market Developed Product $ (200,000) $ 3,540,000 0.3 High Market Response $8,000,000 $6,700,000 05 Medium Market Response $4,000,000 $2,700,000 02 Low Market Response $2,200,000 $ 900,000 For Education Only $ $ As S As $ $ 0 (900,000) (100,000) 6,700,000 2,700,000 900,000 (100,000) 1,700,000

Answer rating: 100% (QA)

A The expected value of perfect information on the outcome of the research effort would be the estimated value of the outcome that is derived from the data and analysis This could be determined by ana... View the full answer