There is a 25% chance that a $100,000 investment will yield $25,000 and a 75% chance that the investment will yield $10,000. However, you are confident that if you purchase market research for $5000 you can with certainty invest the $100,000 and earn $20,000. In this case, the value of complete information is

0 votes
    $5,000, and so it is not worth paying $5000 for the market research.
     $15,000, and so it is not worth paying $5000 for the market research.
     $7,500, and so it is worth paying for the market research.
     $6,250, and so it is worth paying the $5,000 for the market research.
asked Jun 2, 2013 in Economics by anonymous
    

1 Answer

0 votes
$6,250, and so it is worth paying the $5,000 for the market research.
answered Jun 3, 2013 by Xyz ~Expert~ (3,650 points)

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