Considering forming new cosmetic clinic that opens next year

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Reference no: EM131567174

A group of plastic surgeons is considering forming a new cosmetic clinic that opens next year. If the demand for the clinic is high, then the surgeons can realize a net yearly profit of $1065511. If the demand is low, then they could lose $460068 per year. Of course, they don’t have to proceed at all, in which case there is no cost. In the absence of any market data, the best these surgeons can guess is that there is a 70% chance that demand will be high. The surgeons have been approached by a market research firm that offers to perform a study of the market. The market researchers’ past records show that among the high demand markets, 96% show a positive result in the study. Among the low demand markets, 74% show a negative result. What is the maximum amount that these surgeons are willing to pay for the study? (Calculate EVSI.)

Reference no: EM131567174

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