The Expected Value of Perfect Information (EVPI)is Always the Same

question 80

True/False

The expected value of perfect information (EVPI)is always the same as the expected opportunity loss for the best alternative.That is,EVPI = EOL^*.

---

Definitions:

Effective-Interest Method

A technique used in accounting to amortize the discount or premium on bonds payable over the life of the bonds more accurately than the straight-line method.

Bonds

Bonds are fixed-income securities that represent a loan made by an investor to a borrower, typically corporate or governmental, which pays periodic interest payments and the return of the principal at maturity.

Amortization

The gradual reduction of a debt or the spreading out of capital expenses for intangible assets over a specific period of time.

Accounting Period

The time frame in which financial transactions are recorded and reported, typically a fiscal year or quarter.