Question: Refer to the information given in Exercise 18.10. Using the probabilities of .60 for a new railroad spur and .40 for no new railroad spur.

Refer to the information given in Exercise 18.10. Using the probabilities of .60 for a new railroad spur and .40 for no new railroad spur.

a. Compute the expected monetary value for each location.
b. Find the location that should be selected using the expected monetary value criterion.
c. Compute the EVPI, expected value of perfect information.

No New Railroad Spur New Railroad Alternatives Spur Built $1* $14 Location A Location B 2 10 Location C

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