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Dollar Department Stores has just learned the chain of Wenthrope and Sons Custom Jewelers. Dollar has received a proposal from Harris Diamonds to purchase the Wenthrope store on Grove Street for $120,000. Dollar has resolute 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. Must 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(I1 | 80,000) = .1; P(I1 | 100,000) = .2; P(I1 | 120,000) = .6; P(I1 | 140,000) = .3. Must Dollar purchase the forecast?

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Business Management, Management Studies

Category:- Business Management
Reference No.:- M9156566

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