Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please help with part C , E and F. Please state what exactly the answer is in the format given and how you get it,

Please help with part C , E and F. Please state what exactly the answer is in the format given and how you get it, thanks.

image text in transcribedimage text in transcribed

Problem 13-19 (Algorithmic) Hale's TV Productions is considering producing a pilot for a comedy series in the hope f selling it to a major television network. The network may decide to reject the series, but it may also decide to purchase the rights to the series for either one or two years. At this point in time, Hale may either produce the pilot and wait for the network's decision transfer the rights for the pilot and series to competitor for $300,000. Hale's decision alternatives and profits (in thousands of dollars) are as follows: State Nature Decision Reject, 1 Year, 2 Years, Alternative S1 S2 S3 Produce pilot, di -250 300 350 Sell to competitor, 300 300 300 dz The probabilities for the states of nature are P(S1) 0.20, P(S2) 0.300, and P(S3)0.50. For a consulting fee of $30,000, an agency will review the plans for the comedy series and indicate the overall chances of favorable network reaction to the series. Assume that the agency review will result in a favorable (F or an unfavorable (U) review and that the following probabilities are relevant: P(F) 0.63 P(S1F) 0.05 P(S1U) 0.46 P(S2IF)= 0.24 P(U) 0.37 P(S2U) 0.32 P(S3 F) 0.71 P(S3U) 0.22 b. What is the recommended decision if the agency opinion is not used? What is the expected value? Enter your answer in thousands of dollars. Recommended decision Sell 300 thousands. Expected Value $ c. What is the expected value of perfect information? Enter your answer in thousands of dollars. EVPI $ 25 thousands. d. What is Hale's optimal decision strategy assuming the agency's information is used? If Favorable Produce If Unfavorable Sell e. What is the expected value of the agency's information? Round your answer to two decimal places. Enter your answer in thousands of dollars. EVSI $ thousands. f. Is the agency's information worth the $30,000 fee? What the maximum that Hale should be willing to pay for the information? Decision No Hale should pay no more than $ thousands. Round your answer to two decimal places. Enter your answer in thousands of dollars. g. What is the recommended decision? No agency; sell the pilot Problem 13-19 (Algorithmic) Hale's TV Productions is considering producing a pilot for a comedy series in the hope f selling it to a major television network. The network may decide to reject the series, but it may also decide to purchase the rights to the series for either one or two years. At this point in time, Hale may either produce the pilot and wait for the network's decision transfer the rights for the pilot and series to competitor for $300,000. Hale's decision alternatives and profits (in thousands of dollars) are as follows: State Nature Decision Reject, 1 Year, 2 Years, Alternative S1 S2 S3 Produce pilot, di -250 300 350 Sell to competitor, 300 300 300 dz The probabilities for the states of nature are P(S1) 0.20, P(S2) 0.300, and P(S3)0.50. For a consulting fee of $30,000, an agency will review the plans for the comedy series and indicate the overall chances of favorable network reaction to the series. Assume that the agency review will result in a favorable (F or an unfavorable (U) review and that the following probabilities are relevant: P(F) 0.63 P(S1F) 0.05 P(S1U) 0.46 P(S2IF)= 0.24 P(U) 0.37 P(S2U) 0.32 P(S3 F) 0.71 P(S3U) 0.22 b. What is the recommended decision if the agency opinion is not used? What is the expected value? Enter your answer in thousands of dollars. Recommended decision Sell 300 thousands. Expected Value $ c. What is the expected value of perfect information? Enter your answer in thousands of dollars. EVPI $ 25 thousands. d. What is Hale's optimal decision strategy assuming the agency's information is used? If Favorable Produce If Unfavorable Sell e. What is the expected value of the agency's information? Round your answer to two decimal places. Enter your answer in thousands of dollars. EVSI $ thousands. f. Is the agency's information worth the $30,000 fee? What the maximum that Hale should be willing to pay for the information? Decision No Hale should pay no more than $ thousands. Round your answer to two decimal places. Enter your answer in thousands of dollars. g. What is the recommended decision? No agency; sell the pilot

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Shareholder Empowerment A New Era In Corporate Governance

Authors: Maria Goranova, Lori Verstegen Ryan

1st Edition

1137376449,1137373938

More Books

Students also viewed these Finance questions