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A School wants to increase its number of students. So, the school, is considering an advertising campaign and set up the following advertising cost: The
A School wants to increase its number of students. So, the school, is considering an advertising campaign and set up the following advertising cost:
The resulting incremental revenue and the probability of success for each level of advertising cost:
Advertising cost Incremental revenue Probability of success
$10,000 $100,000 30%
$13,000 $120,000 25%
$18,000 $180,000 20%
$25,000 $200,000 15%
$30,000 $250,000 0%
If the school makes decisions based on maximizing expected value, what is the expected value of the best advertising option?
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