PROBLEM 2.2. We can invest a sum of SEK 1250, by way of "venture capital", in a firm that could be created to develop a new video game. The total cash-flow is equal to SEK {4000,withprobability0.3,2000,withprobability0.7. These cash-flows are expressed as present values, and include the firm's liquidation value. Our bargaining power is such that we would receive 35% of the firm's cash-flows. Our venture fund employs two "video game-experts," Expert A and Expert B. Each expert is characterised by a probability of giving a favourable or an unfavourable opinion, given the cash-flow (CF) - see Table 3a and Table 3b. (A) Expert A. (B) Expert B. TABLE 3. The conditional probabilities of the experts' opinions. 2.2.1. Show that if we consulted only Expert A, then our optimal decision would be to not fund the project, regardless of the expert's opinion. 2.2.2. Show that if we consulted only Expert B, then our optimal decision would be to not fund the project, regardless of the expert's opinion. Figure 1. The decision process in 2.2.3. 2.2.3. Let us put the old say that "two heads are better than one" to the test. Consider the decision strategy illustrated in Figure 1 (on page 4): If Expert A expresses an unfavourable opinion, we reject the project immediately. Else, we update the probability of success and pass the project on to Expert B. Show that if Expert B then expresses a favourable opinion, we should accept the project, and calculate the expected payoff from the project before we consult the first expert (disregarding any fees that the experts may charge)? 2 Hint. The expected payoff "from the scratch" in 2.2 .3 is equal to the expected payoff if we decide to invest multiplied by the total probability of a double favorable opinion