Investment timing option: left Table shows the investment made now (year 0); right Table shows the investment made 1 year later. Discount rate is r = 10%. Probability Year 0 0.50 -$28 0.50 Year 1 $55 $22 Year 2 Probability Year 0 0.50 $0 0.50 Year 1 -$28 -$28 Year 2 $55 $22 If this project's uncertainty in Year 0 (two scenarios with 50% chance each) is completely gone right after the end of year 0, i.e., you will know which scenario turns out to be true right after Year 0, then what is the value of this investment timing option today? [Hint: value of the option = E[NPV with option] -E[NPV] =?]

The following information relates to a project (task times are in weeks). Use the information to solve for the critical path and then to determine the probability that the project could be completed within 36 weeks. Task A B C D E F Preceding Tasks to 4 4 2 None A B D, E tm 6 7 7 8 13 9 8 0 W CON 6 tp 8 10 12 18 15 10 Click the icon to view the table of standard normal probabilities. The probability that the project is completed within 36 weeks is. (Enter your response rounded to four decimal places.)

Cachora Dynamics Corp (CDC) has designed a new integrated circuit that will allow it to enter, if it wishes, the microcomputer field. Otherwise, it can sell its rights for $15 million. If it chooses to build computers, the profitability of this project depends on the company's ability to market them during the first year. Two levels of sales are foreseen as two possible outcomes: selling 10,000 computers in case of low demand, but if it is successful it can sell up to 100,000 units (high demand). The cost of installing the production line is $6 million. The difference between the selling price and the variable cost of each computer is $600. a) Develop a formulation for decision analysis and use the non-probabilistic decision rules: Maximin and Minimax.  b) Assume that the probability of high demand (p) is 50% and for low demand (1 - p) is 50%, apply the probabilistic criteria: Maximum expected value, Minimum loss of opportunity. c) Determine the VEIP.  d) Carry out a sensitivity…

1.  Kirsten is trying to decide where to go for her well-earned vacation. She would like to camp, but if the weather is bad, she will have to go to a motel. Given the costs and probabilities of bad weather given below, which destination should she choose?   Camping cost Motel cost Probability of bad weather Nevada $21.2 $80.9 0.2 Oregon $15.9 $84.6 0.4 California $30 $95 0.1   a. California, because its EMV = $33.14 b. Nevada, because its EMV = $33.14 c. California, because its EMV = $36.5 d. Any of the 3 choices. e. Oregon, because its EMV = $43.38 f. Nevada, because its EMV = $43.38 g. None of the 3 choices. h. Oregon, because its EMV is $36.50.