Question: M-3, an investment company is considering locating a business in a certain location. They have secured a line of credit for $200,000. There is no data available to assess the chances of a favorable market for their brand name. They have used a survey instrument before and historically have found that when the market is favorable, the survey will predict a favorable market 90% pf the time. On the other hand, when the market was actually unfavorable, the survey predicted an unfavorable Markey 60% pf the time.

Since they did not have data, they guessed there would be a 50/50 probability of a favorable or unfavorable market. Therefore, they will conduct a survey of the area. The survey will cost $10,000.

If the market is favorable a building materials store would yield a profit of 500,000; but if the market is unfavorable, they would lose $150,000.

If the market is favorable a hardware store would yield a profit of $250,000. The hardware store would lose $90,000 if the market is unfavorable.

What is probability of a positive survey? _____________________

What is probability of a negative survey? _____________________

Find and show the revised probability for a favorable market given a positive survey ______________

Find and show the revised probability for an unfavorable market given a positive survey ___________

Find and show the revised probability for a favorable market given a negative survey ______________

Find and show the revised probability for an unfavorable market given a negative survey ___________

What did you find to be the Maximum EMV? ______________________________________________

Price: $2.99

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Deliverable: Word Document