QuickHelper

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About QuickHelper

Levels Tought:
Elementary,High School,College,University,PHD

Expertise:
Accounting,Applied Sciences See all
Accounting,Applied Sciences,Business & Finance,Chemistry,Engineering,Health & Medical Hide all
Teaching Since: May 2017
Last Sign in: 353 Weeks Ago, 1 Day Ago
Questions Answered: 20103
Tutorials Posted: 20155

Education

  • MBA, PHD
    Phoniex
    Jul-2007 - Jun-2012

Experience

  • Corportae Manager
    ChevronTexaco Corporation
    Feb-2009 - Nov-2016

Category > Business & Finance Posted 07 Jun 2017 My Price 13.00

Operations Management

Question description

 

 

Play now?  Play later?

You can become a millionaire!  That's what the junk mail said.  But then there was the fine print:

If you act before midnight tonight, then here are you chances: 0.1% that you receive $1,000,000;

75% that you get nothing, otherwise you must PAY $5000.

But wait, there's more!  If you don't win the million AND you don't have to pay on your first attempt then

you can choose to play one more time.

If you do, then we 20X your probability of winning big - yes, you will hava a 2% chance of 

receiving $100,000 and 60% chance of winning $7500, but must pay $10,000 otherwise.
     

What is your expected outcome for attempting this venture?  Solve this problem using

a decision tree and clearly show all calculations and the expected value at each node.
     

Answer these questions:

1) should you play at all? (5%) And if so, what is my expected (net) monitary value? (10%)

2) If you play and don't win at all on the first try (but don't lose money), should you try again? (5%) Why? (5%)

3) clearly show the decision tree (40%) and expected net monitary value at each node (25%)

 

Answers

QuickHelper
(10)
Status NEW Posted 07 Jun 2017 09:06 PM My Price 13.00

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