Problem $6-51$ Algo w$\_$PrecisionTree $($Multistage Decision Problems$)$

Question $4$ of $5$

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A television network earns an average of $$16$ million each season from a hit program and loses an average of $$8$ million each season on a program that turns out to be a flop. Of all programs picked up by this network in recent years, $25\%$ turn out to be hits and $75\%$ turn out to be flops. At a cost of $C$ dollars, a market research firm will analyze a pilot episode of a prospective program and issue a report predicting whether the given program will end up being a hit. If the program is actually going to be a hit, there is a $75\%$ chance that the market researchers will predict the program to be a hit. If the program is actually going to be a flop, there is only a $30\%$ chance that the market researchers will predict the program to be a hit.

a$.$ What is the maximum value of $C$ that the network should be willing to pay the market research firm? Enter your answer in dollars, not in million dollars.

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b$.$ Calculate EVPI for this decision problem. Enter your answer in dollars, not in million dollars.

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