Dollar Department Stores Has Received an Offer from Harris Diamonds $\mid$

question 36

Essay

Dollar Department Stores has received an offer from Harris Diamonds to purchase Dollar's store on Grove Street for $120,000. Dollar has determined probability estimates of the store's future profitability, based on economic outcomes, as: P($80,000) = .2, P($100,000) = .3, P($120,000) = .1, and P($140,000) = .4.
a.Should Dollar sell the store on Grove Street?
b.What is the EVPI?
c.Dollar can have an economic forecast performed, costing $10,000, that produces indicators I₁ and I₂, for which P(I₁ $\mid$ 80,000) = .1; P(I₁ $\mid$ 100,000) = .2; P(I₁ $\mid$ 120,000) = .6; P(I₁ $\mid$ 140,000) = .3.Should Dollar purchase the forecast?

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Definitions:

Piaget's Theory

A comprehensive theory of cognitive development proposed by Jean Piaget, which outlines how children progress through distinct stages of intellectual growth.

Intellectual Development

The growth and change in an individual’s cognitive abilities and capacities throughout the lifespan, including thinking, problem-solving, and decision-making skills.

Understandings

The comprehension or grasp of knowledge about a particular subject, issue, or situation.

Discriminate

The act of making distinctions between people or things based on class, race, gender, etc., often leading to unfair treatment.