What is the EVPI? Success Moderate Success Failure Probability 03 0.3 0.4 Sell Company 108 Form Joint Venture 120 S...

Question

Question

Answer 1

Answer #1

The EMV of each alternative is

Sell company = 0.3*108 + 0.3*108+ 0.4*108 = 108

Form JV = 0.3*210+0.3*120+0.4*20= 63+36+8= 107

Sell software on own= 0.3*420+0.3*161+0.4*100= 126+48.3+40= 214.3

So EMV is 214.3

Expected value when we have perfect information is

0.3"420+0.3*161+0.4*108= 126+48.3+43.2= 217.5

So EVPI = 217.50-214.30= 3.20

Answer 2

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