The management of Copper must choose whether to go ahead with either of two mutually exclusive projects, A and B. The expected profits are as follows.

Profit if there isProfit if there isProfit/(loss) if there

strong demandmoderate demandis weak demand

Option A$5,000$1,800$(1,200)

Option B$2,500$1,200$400

Probability of demand0.250.30.45

Required

(a) Ascertain what the decision would be, based on expected values, if no information about demand were available.

(b) Calculate the value of perfect information about demand.