Question

A manager is quite concerned about the recent deterioration of a section of the roof on a building that houses her firm's computer operations. According to her assistant there are three options which merit consideration: A, B, and C. Moreover, there are three possible future conditions that must be included in the analysis: I, which has a probability of occurrence of .1; II, which has a probability of .3; and III, which has a probability of .6.

If condition I materializes, A will cost $12,000, B will cost $20,000, and C will cost $16,000.
If condition II materializes, the costs will be $15,000 for A, $18,000 for B, and $14,000 for C.
If condition III materializes, the costs will be $10,000 for A, $15,000 for B, and $19,000 for C.

State of Nature..............I..............II............III
Option A...................12000.......15000.......10000
Option B...................20000.......18000.......15000
Option C...................16000.......14000.......19000

Expected Monetary Value of A = Expected Monetary Value of B = Expected Monetary Value of C =

Enter the Alternative that you would choose. Enter A, B, or C

Answer 1

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