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A firm has two investment alternatives. The return on each investment depends on the economic conditions. The payoffs (in thousands of dollars) are estimated as follows. The payoffs(in thousands of dollars) for investment 1 are 100, 25, and 0 for Up, Stable or Down economic conditions respectively. The payoffs for investment 2 are 85, 50 and 25 for Up, Stable and Down conditions. Construct a payoff table.

What is the opportunity loss for the decision alternative Investment 2 under the state of nature down economic condition?

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Operation Management, Management Studies

Category:- Operation Management
Reference No.:- M91351674

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