Risk analysis and the value of information

Assignment Help Project Management

Reference no: EM1343457

Risk Analysis and the Value of Information

Sue Reynolds has to decide if she should get information (at cost of $300,000) to invest in retail store. if she gets the information, there is a 0.45 probability that the information will be favorable and a 0.55 probability that the information will not be favorable.If the information is favorable, there is a 0.9 probability that the store will be a success.If the information is not favorable the probability of a successful store is only 0.2 without any information,sue estimates that the probability of a successful store will be 0.6 A successful store will give a return of $120,000. if the store is built but is not successful,Sue will see a loss of $90,000. of course, she could always decide not to build the retail store.

1) construct a decision tree.

2) what do you recommend?

Reference no: EM1343457

Questions Cloud

What can project manager do in case like this : Who may not have decision-making authority but are "warm bodies" just sent to sit in on meetings and what can the project manager do in this case?

Strategic considerations to justify a project : Strategic Considerations To Justify A Project - Many financial analysts are very skeptical of the use of strategic considerations to justify a project.

Explain the steps in the statistical analysis : Explain the steps in the statistical analysis and explain the steps in the statistical analysis

What will be this value in si units : The density of mercury is 13.595 g cm -3 . What will be this value in SI units? Give the SI units and their symbols for the following physical quantities:

Risk analysis and the value of information : Construct a decision tree - Risk Analysis and the Value of Information

Project evaluation using the marr : You are curious as to how long you should keep the car and you will graduate soon and you do not want to keep the car longer than 4 years.

Project worth through present and annual worth : Assess project worth through Present and Annual worth - Evaluate which alternative to recommend by the PW method and the AW method.

Analyze projects and recommend project : The CFO has asked you to analyze the projects and recommend which project he should fund and aBC Inc. has a required rate of return of 15% risk adjusted.

Project management : Do you think by informing the customer that you need more time for a project or the quality of the system would be diminished, they will give you more time?

User Account

All Pages