Company N is considering opening a new retail store in downtown, and they have begun an analysis of the situation. There are two possible locations under consideration. One is relatively small, while the other is large. If he opens at Location A and demand is good, the company will generate a profit of $65,000. If demand is low, they will lose $9,000. If the company opens at Location B and demand is high, they will generate a profit of $90,000, but they will lose $33,000 if demand is low. The Company N also has the option of not opening either. They believe that there is a 60 percent chance that demand will be high. The Company N can purchase a market research study. The probability of a good demand given a favorable study is 0.7. The probability of a good demand given an unfavorable study is 0.2. There is a 60 percent chance that the study will be favorable.

a) Should Company N use the study? Why?

b) What is the maximum amount Company N should be willing to pay for this study?

c) What is the maximum amount he should pay for any study?