Question

1/12/19 1. Dollar Department Stores has just acquired the chain of Wenthrope and Sons Custom Jewelers. Dollar has received an offer from Harris Diamonds to purchase the Wenthrope store on Grove Street. This sale would yield a $120,000 proft for the Dollar Department Store. Dollar has determined probability estimates of the store's future profitability, based on economic outcomes, as follows: P(S70.000) 2, P(s100,000) 3, P($150,000) 5. Dollar wants to use expected value analysis to determine whether or not to sell the store. (a) Create the payoff table which represents the amount profit that (b) Should Dollar sell the store on Grove Street based on the probabilities of economic outcomes? ent Stores woul ) If the Dollar Store used the minimax regret approach, should they sell the store? (d) Calculate EVwoPI and EVwPI (e) Calculate EVPI. Explain the significance of this value to the Dollar Store a disell store not Selling Ca Profit pbbtites S2. op K dにSell /2o k loo K150 K its better to sell he Store

Answer 1