Dante Has Two Possible Routes to Travel on a Business

question 97

Multiple Choice

Dante has two possible routes to travel on a business trip. One is more direct but more exhausting, taking one day but with a probability of business success of 1/4. The second takes three days, but has a probability of success of 2/3. If the value of Dante's time is $1000/day, the value of the business success is $12,000, and Dante is risk neutral,

• A) it doesn't matter which path he takes, because he doesn't consider risk.
• B) he should take the 1-day trip, because he doesn't consider risk.
• C) he should take the 1-day trip, because $11,000 is greater than $9,000.
• D) he should take the 3-day trip, because it will increase his expected net revenue by $3,000.
• E) he should take the 3-day trip, because it will increase his expected net revenue by $5,000.

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