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    Peter Anton Roa
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    The document contains calculations related to potential profits and expected monetary values (EMVs) of different decision strategies for a development corporation. It shows profits of $2.65M and $650K under two scenarios and calculates the EMV of bidding on a contract without research as $1,870,000, higher than other options.

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    The document contains calculations related to potential profits and expected monetary values (EMVs) of different decision strategies for a development corporation. It shows profits of $2.65M and $650K under two scenarios and calculates the EMV of bidding on a contract without research as $1,870,000, higher than other options.

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    © All Rights Reserved
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    6 views2 pages

    Assignment 5

    Uploaded by

    Peter Anton Roa
    The document contains calculations related to potential profits and expected monetary values (EMVs) of different decision strategies for a development corporation. It shows profits of $2.65M and $650K under two scenarios and calculates the EMV of bidding on a contract without research as $1,870,000, higher than other options.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 2

    a.

    $2,650,000 = $5,000,000 - $200,000 - $2,000,000 - $150,000

    $650,000 = $3,000,000 - $200,000 - $2,000,000 - $150,000

    b. The Optimal Decision Strategy for Dante Development Corporation is to bid on the contract and
    then carry out the following decision strategy:

    If win the contract, then do not conduct market research and proceed to build a complex.

    c. (1,870,000 + 150,000) – 2,000,000 = $20,000

    d.
    EMV (node 8) = (.85) (2650) + (0.15) (650) = 2,350

    EMV (node 9) = (0.225) (2650) + (0.775) (650) = 1,100

    EMV (node 10) = (0.6) (2800) + (0.4) (800) = 2,000

    EMV (node 4) = (0.6) (2,350) + (0.4) (1,150) = 1,870

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