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Dollar Department Stores has just acquired the chain of Wenthrope Custom Jewelers. Dollar has received an offer from Harris Diamonds to purchase the Wenthrope store on Grove Street for $129,000. Dollar has determined probability estimates of the store's future profitability, based on economic outcomes, as: P ($85,000) = 0.2, P ($107,000) = 0.3, P ($129,000) = 0.1, and P ($159,000) = 0.4. (a) Should Dollar sell the store on Grove Street? Yes, Dollar should sell the store.No, Dollar should not sell the store.     (b) What is the EVPI (in $)? $  (c) Dollar can have an economic forecast performed, costing $14,000, that produces indicators  I1  and  I2,  for which  P (I1 | 85,000) = 0.1;   P (I1 | 107,000) = 0.2;   P (I1 | 129,000) = 0.6;   P (I1 | 159,000) = 0.3.  Should Dollar purchase the forecast? YesNo

Dollar Department Stores has just acquired the chain of Wenthrope Custom Jewelers. Dollar has received an offer from Harris Diamonds to purchase the Wenthrope store on Grove Street for $129,000. Dollar has determined probability estimates of the store's future profitability, based on economic outcomes, as: P ($85,000) = 0.2, P ($107,000) = 0.3, P ($129,000) = 0.1, and P ($159,000) = 0.4. (a) Should Dollar sell the store on Grove Street? Yes, Dollar should sell the store.No, Dollar should not sell the store.     (b) What is the EVPI (in $)? $  (c) Dollar can have an economic forecast performed, costing $14,000, that produces indicators  I1  and  I2,  for which  P (I1 | 85,000) = 0.1;   P (I1 | 107,000) = 0.2;   P (I1 | 129,000) = 0.6;   P (I1 | 159,000) = 0.3.  Should Dollar purchase the forecast? YesNo

Holt Mcdougal Larson Pre-algebra: Student Edition 2012
Holt Mcdougal Larson Pre-algebra: Student Edition 2012
1st Edition
ISBN:9780547587776
Author:HOLT MCDOUGAL
Publisher:HOLT MCDOUGAL
Chapter11: Data Analysis And Probability
Section11.8: Probabilities Of Disjoint And Overlapping Events
Problem 2C
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Dollar Department Stores has just acquired the chain of Wenthrope Custom Jewelers. Dollar has received an offer from Harris Diamonds to purchase the Wenthrope store on Grove Street for $129,000. Dollar has determined probability estimates of the store's future profitability, based on economic outcomes, as: P ($85,000) = 0.2, P ($107,000) = 0.3, P ($129,000) = 0.1, and P ($159,000) = 0.4.
(a)
Should Dollar sell the store on Grove Street?
Yes, Dollar should sell the store.No, Dollar should not sell the store.    
(b)
What is the EVPI (in $)?
$ 
(c)
Dollar can have an economic forecast performed, costing $14,000, that produces indicators 
I1
 and 
I2,
 for which 
P (I1 | 85,000) = 0.1;
 
P (I1 | 107,000) = 0.2;
 
P (I1 | 129,000) = 0.6;
 
P (I1 | 159,000) = 0.3.
 Should Dollar purchase the forecast?
YesNo    
 
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In step 4 why did multiply $129000(.6) instead of (.1) like it has in the given.

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