Sunday
April 20, 2014

Homework Help: Devon

Posted by Economics on Monday, February 25, 2008 at 9:58pm.

A person must decide whether or not to proceed with a particular investment project. If the project succeeds, She will gain $15 million. If the project fails, she will lose $3 million. She estimates there is a 20% chance that the project will succeed and an 80% chance it will fail.

There is a consultant that could tell her with certainty if the project succeed or fail, but only for a fee. What is the most that she should be willing to pay the consultant for the information? Explain. Assume that she correctly estimated the probabilities of the projectís likely success and failure.

I AM LOST on this one - can anyone please help?

Answer this Question

First Name:
School Subject:
Answer:

Related Questions

Economics - A person must decide whether or not to proceed with a particular ...
Finance - Wheel Industries is considering a three year expansion project. The ...
finance - Wheel Industries is considering a three-year expansion project. The ...
Finance - FIN500, Inc. has the following project. It is a 4 year project and ...
finance - You have been given the following information on a project: It has a 3...
finance - Carlyle Inc. is considering two mutually exclusive projects. Both ...
Finance - Calculate the projectís initial Time 0 cash flow, taking into account ...
statistics - Your program has an RDT&E-funded project scheduled to start in July...
math - Your program has an RDT&E-funded project scheduled to start in July 2005 ...
Real Estate Finance - A developer is interested in a parcel of land for a small ...

Search
Members