Dollar Department Stores Has Received an Offer from Harris Diamonds

question 42

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(I_{1SYMBOL 189 \f "Symbol"}80,000)= .1;P(I_{1SYMBOL 189 \f "Symbol"}100,000)= .2;P(I_{1SYMBOL 189 \f "Symbol"}120,000)= .6;P(I_{1SYMBOL 189 \f "Symbol"}140,000)= .3.Should Dollar purchase the forecast?

---

Definitions:

Clamping

The process of holding or securing objects tightly together using a device to prevent movement or separation.

Grasping

The action of seizing or holding firmly, often used to describe the development of motor skills in infants or for understanding concepts.

Scissors

Tools consisting of two blades joined together, used for cutting paper, cloth, or other materials.

Cutting

A form of self-injury where individuals intentionally cut their skin as a way of coping with emotional pain, stress, or distress.