What is the most that should be paid for this forecast

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Nick has plans to open some pizza restaurants, but he is not sure how many to open. He has prepared a payoff table to help analyze the situation.

Nick believes there is a 40 percent chance that the market will be good, a 30 percent chance that it will be fair, and a 30 percent chance that it will be poor. A market research firm will analyze market conditions and will provide a perfect forecast (they provide a money back guarantee). What is the most that should be paid for this forecast?

a. $123,000

b. $132,000

c. $ 53,000

d. $176,000

e. $ 44,000

 

Reference no: EM13251821

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