Felicidad Ramirez has come of age and now has access to a very substantial trust fund. The trust fund allows her to invest part of the money she will inherit. Felicidad is a multi-awarded pastry chef and has been working as a head baker in one of the trendy bakeries in New Jersey. With her newfound fortune, Felicidad is now considering opening her own bakery. She wants to start one in Seattle where she was born and raised. However, she also has some friends who believe that she should also open a "twin" branch in New York where they feel her trendy baked goodies would be very well-accepted by the market. Felicidad's friends think that it would be so cool if she could open the two locations at the same time. Felicidad is mulling over her options and is also considering to continue working at her current job and not open her own bakeries. Felicidad's best friend, Travis, helped her prepare a payoff table to help her analyze the situation. States of Nature (amounts are in $'000s) Alternatives Very Favorable Favorable Unfavorable Open in Seattle 380 70 -400 Open in Seattle and New York 200 80 -200 Felicidad believes that there is a 30 percent chance that the market will be unfavorable, a 30 percent chance that it will be favorable, and 40 percent chance it would be very favorable. Travis advised Felicidad that they should hire Manny, a consultant, to help them analyze the market situation in greater detail. Manny mentioned that he provides a money-back guarantee. The most Felicidad should pay Manny for his services is $
Felicidad Ramirez has come of age and now has access to a very substantial trust fund. The trust fund allows her to invest part of the money she will inherit. Felicidad is a multi-awarded pastry chef and has been working as a head baker in one of the trendy bakeries in New Jersey.
With her newfound fortune, Felicidad is now considering opening her own bakery. She wants to start one in Seattle where she was born and raised. However, she also has some friends who believe that she should also open a "twin" branch in New York where they feel her trendy baked goodies would be very well-accepted by the market. Felicidad's friends think that it would be so cool if she could open the two locations at the same time. Felicidad is mulling over her options and is also considering to continue working at her current job and not open her own bakeries.
Felicidad's best friend, Travis, helped her prepare a payoff table to help her analyze the situation.
|
States of Nature (amounts are in $'000s) |
|||
|
Alternatives |
Very Favorable |
Favorable |
Unfavorable |
|
Open in Seattle |
380 |
70 |
-400 |
|
Open in Seattle and New York |
200 |
80 |
-200 |
Felicidad believes that there is a 30 percent chance that the market will be unfavorable, a 30 percent chance that it will be favorable, and 40 percent chance it would be very favorable. Travis advised Felicidad that they should hire Manny, a consultant, to help them analyze the market situation in greater detail. Manny mentioned that he provides a money-back guarantee.
The most Felicidad should pay Manny for his services is $___________.
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