Expert Answers

In Problem 13 the Place-Plus real estate development firm has hired an economist to assign a probability to each direction interest rates may take over the next 5 years. The economist has determined that there is a .50 probability that interest rates will decline, a .40 probability that rates will remain stable, and a .10 probability that rates will increase.
1. Using expected value, determine the best project.
2. Determine the expected value of perfect information.