What is the expected monetary value for manar

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Reference no: EM133486639

Case: Brampton Metaverse Network must decide on which one of two new digital games to create: MANAR or PENTAGO. The costs of producing and operating the two games are similar and the average monthly subscription for either game could be low (23,000 subscribers), medium (81,000 subscribers), or high (179,000 subscribers).

If the company chooses to create MANAR, they will charge $40 per account for monthly subscription, and the probabilities of low and high subscriptions are 0.15 and 0.68 respectively.

For PENTAGO, there is a 54% chance that a competitive game will appear on the market. The probability of low subscription is 0.33 if no competitive game appears and 0.6 if a competitive game appears. The probability of medium subscription is 0.24 whether or not competition appears. The company will charge $46/month per account for subscription to PENTAGO if no competitive game appears but will only charge $35/month if competition appears.

Construct a decision tree for the problem, where payoffs are total monthly subscription in dollars.
For example, if MANAR is created and subscription is low, then subscription dollars will be $40*23000 = $920,000.

Report answers accurate to the nearest dollar.

Question 1: What is the expected monetary value for MANAR?

Question 2: What is the expected monetary value for PENTAGO if there is no competition?

Question 3: What is the expected monetary value for PENTAGO if competition appears?

Question 4: What is the expected monetary value for PENTAGO?

Question 5: What is the expected monetary value of the optimal decision?

Reference no: EM133486639

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