There Is an Option of Paying $100 to Have Research

question 29

Multiple Choice

There is an option of paying $100 to have research done to better predict which state of nature will occur.When the true state of nature is S1,the research will accurately predict S1 60% of the time.When the true state of nature is S2,the research will accurately predict S2 80% of the time.
-Given that the research is not done,what is the expected payoff using Bayes' decision rule?

• A)0
• B)29
• C)40
• D)75
• E)100

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Definitions:

Deferred Revenue

Income received by a company for goods or services yet to be provided; recognized as a liability until the service or product is delivered.

Journal Entry

A record in accounting that represents a transaction where debits and credits are equal, documenting financial transactions in the ledger.

Depreciation Expense

The deliberate apportionment of a tangible asset's cost over the period it is expected to be useful.

Useful Life

The estimated time period a fixed asset is expected to be usefully productive for a business.