Nick uses the equally likely criterion

Reference no: EM1316184

Decision making using expected payoff.

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.

	States of Nature
	Market
Alternative	GOOD	FAIR	POOR
Open 1	380,000	70,000	-400,000
Open 2	200,000	80,000	-200,000
Do Nothing	0	0	0

As Nick does not know how his received, he assumes that all three states of nature are equally likely to occur. If he uses the equally likely criterion, what decision would he make?

Reference no: EM1316184

Questions Cloud

Iindependence of attributes by chi-square test : What is your conclusion? Are the two variables independent?

The possibility that nucleus will be disintegrated the end : The number of bombardment necessary to achieve the disintegration of a certain nucleus is assumed to have the distribution above. In one sequence in which b bombardments are available, of these have already failed to disintegrate the nucleus. What..

Elimination or substitution methods : Elimination or substitution methods

Explain taxes, leasing and the time value of money : Explain taxes, Leasing and the time value of money and explain why a financial lease represents a secured loan in which the lender entire debt service stream is taxable as ordinary income to the lessor/lender

Nick uses the equally likely criterion : Assume Nick doesn't know how his received he suppose that all three states of nature are equally likely to occur. If Nick uses the equally likely criterion illustrate what decision would he make.

Valuation of stock using capm : Valuation of stock using CAPM - Estimate the value of Cargo Point, Inc. stock.

Problem on central limit theorem area under a curve : The manufacturer of a coffee dispensing machine claims the ounces per cup is normally distributed with population mean equal to 8 ounces and standard deviation equal to 0.9 ounces. If 50 cups of coffee were measured, what is the possibility that- ..

Various costs and change in costs : Point out how each of the following would shift the 1) average-variable-cost curve, 2) average-fixed-cost curve, and 3) average-total-cost curve. Mention two types of businesses that their costs are mostly variable costs, and list 2 types of busin..

Find the company''s current stock price : Calculation of required rate of return and valuation of current stock price - Find the company's current stock price?

User Account

All Pages