A film producer is evaluating a script by a new screenwriter. The producer knows that the probability of a play by a new screenwriter being a success is about 40 percent, and the probability of it being a failure is about 60 percent. The producer estimates that the profit will be $30 million if the play is a hit, but there will be a loss of $10 million if the play is a failure.

a) What is the expected value with perfect information?

b) What is the expected profit associated with the producer's decision if the producer uses the expected value strategy?