You Are Evaluating Investment Alternatives for a Ski Resort

question 52

Multiple Choice

You are evaluating investment alternatives for a ski resort.There are four alternative investments and their payoffs (in $10,000s) are shown in the following table,depending on the snow conditions for the next season. If you use the EMV criterion,the probability that the snow conditions are good is p,and you decide investment d₃,what is the expected value of perfect information?

• A) 12p + 3
• B) 2p + 3
• C) p + 3
• D) p + 2
• E) p + 1

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Definitions:

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