Question
Harmony Music School wants to increase its number of students. Trish, the owner of theschool, is considering an advertising campaign to promote Harmony at all
Harmony Music School wants to increase its number of students. Trish, the owner of theschool, is considering an advertising campaign to promote Harmony at all local publicschools.Trish has set up the following table, which illustrates the advertising cost, the resultingincremental revenue and the probability of success for each level of advertising cost.AdvertisingcostIncrementalrevenueProbabilityof 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 10%If Trish makes decisions based on maximizing expected value, what is the expected valueof the best advertising option? a) $3,750 b) $16,600 c) $32,400 d) $134,400
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