Exhibit 14.4
The following questions are based on the information below.
-Refer to Exhibit 14.4. What is the expected value of perfect information for the investor?
A) 13.5
B) 20
C) 45.5
D) 59

Question

Exhibit 14.4
The following questions are based on the information below. 
-Refer to Exhibit 14.4. What is the expected value of perfect information for the investor?
A) 13.5 
B) 20 
C) 45.5 
D) 59

Quizplus · Accepted Answer

Based on the expected value of each option (13.5 for A, 10 for B, and 20 for C), Option A has the highest expected value. Therefore, it is the best choice for the investor. The expected value of perfect information (EVPI) is the difference between the expected value of the best decision under complete information and the expected value of the best decision under risk. In this case, the EVPI is calculated as follows: EVPI = 20 - 13.5 = 6.5.

Exhibit 14.4 The Following Questions Are Based on the Information Below