Question 13 (5 points)

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What is the expected value of perfect information for the payoff table provided? The probability of a market rise is P = 0.7 and the probability of a market decline is P = 0.3

Act	State of Nature ($)
	Market Rise	Market Decline
Investment 1	5,000	1,000
Investment 2	7,000	1,000

Question 13 options:

	$800
	$4,000
	$3,200
	$600

Question 14 (5 points)

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CanaSystems is considering a project to build upscale condominiums. They are considering plans on a small, medium, or large development and balancing possible future demand as low or high. Profits have been estimated and are summarized in a payoff table.

Act	State of Nature ($millions)
	Low P(0.3)	High P(0.7)
Small	6	11
Medium	5	13
Large	4	18

What is the expected value under conditions of certainty?

Question 14 options:

	$14.4 million
	$9.5 million
	$10.6 million
	$11.4 million