Q1) Event node in decision tree for construction company involves bid the company will make for construction of new bridge across river. Given what managers of company know about project and their competitors, they think there is a 60% chance that they will be awarded bid. Net income if awarded bid is evaluated to be $2 million; without bit, net income is expected to be $1 million. Determine the rollback value for this event?

a) $1.6 million

b) $1.4 million

c) $1.0 million

d) $2.0 million

Q2) Expected value of perfect information is:

a) The maximum expected value.

b) The minimum expected opportunity loss.

c) Equal to weighted average of possible payoffs.

d) What the investor will earn if events were certain.

Q3) Determine equation in point-intercept form for line that goes through points (8,-1) and (4,3).

i) y = x + 8

ii) y = -x +7

iii) y = (3/5)x + 4

iv) y = x + 7

Q4) You have business that sells T-shirts.  Marginal cost to make one T-shirt is $3.50.  Your total cost to product 60 T-shirts is $300 and you sell them for $9 each.  Find linear cost function for T-shirt production and how many T-shirts should be sold to break even?

i) C(x) = -60x + 3.5, 1 shirt

ii) C(x) = -3.50x + 90, 8 shirts

iii) C(x) = 3.50x + 510, 39 shirt

iv) C(x) = 3.50x + 90, 17 shirts