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SellsLotsOfStuff.com, a small online retailer, is considering buying a firewall for its website. The costs of the firewall is $10,000. There is an 85% chance
SellsLotsOfStuff.com, a small online retailer, is considering buying a firewall for its website. The costs of the firewall is $10,000. There is an 85% chance that the site will not be hackerattacked during the life of the firewall, a 10% chance of minor attack occurring resulting in $25,000 in damage, and a 5% chance of a major attack occurring resulting in $125,000 in damage. Construct an excel spreadsheet to do the following for A and B: |
A. Compute the expected cost for each decision and select the best one strictly on the basis of expected cost. |
B. Discuss the risks involved with basing the decision strictly on expected cost. |
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