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I need help with this practice question 28 by explaining the steps to figuring out the correct question. Answer questions 27 and 28 based upon
I need help with this practice question 28 by explaining the steps to figuring out the correct question.
Answer questions 27 and 28 based upon the decision tree illustrated below. The dollar amounts stated are \"dollars received\" at each associated outcome. Assume that the decision make is trying to maximize expected utility and has preferences consistent with the Bernoulli Utility Function u(x) = J; . Finn Z is trying to get chosen as the sole producer of a component by Firm Y. Firm Z has an initial decision to either \"Continue R&D\" or \"Abandon RD.\" Htis 3&0 will be either a \"Success\" or \"Failure \" After realizing either successful or failed 1MB, Firm 2' can either make a proposal (\"Proposal \") to Firm Y or not (\"No Proposal\"). If they choose to make a proposal they will either be chosen as the sole supplier of this component (\"Win \") or not chosen (\"Lose\"). Win 27. 28. Proposal $902,500 Success $22,500 Continue R&D $70,225 No Proposal $902,500 Proposal $22,500 Lose $W No Proposal $70,225 Suppose \"p" is equal to .40. The value of \"W\" which makes the rm indifferent between choosing \"Continue R&D\" and \"Abandon MD\" is (i.e., the rm would want to choose \"Continue R&D\" if and only if \"W\" is less than or equal to I. A. $93,636 B. $96,100 C. $161,604 D. $198,500 Suppose \"W\" is equal to $81,796. The value of \"p\" which nukes the firm indifferent between choosing \"Continue R&D\" and \"Abandon R&D" is (i.e., the rm would want to choose \"Continue R&D\" if and only if \"p\" is greater than or equal to I. A. .20 B. .25 C. .30 D .35Step by Step Solution
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