Two Criteria For A Toy Store A Average Premium Of 4000 Probability Of 0 65 B Average 3521900

Two criteria for a toy store: a. average premium of $4000 (probability of 0.65) b. average annual net return of $1500(probability of 0.20) To improve the toy store, 2 alternatives: The costs of this program are $2,200 annually. The cost is $750 per year Questions: Calculate the net returns toy store A and toy store B for each of the two support programs At what probability of obtaining an A toy store from the 1st alternative program would the toy store owner be indifferent using the expected value approach between the two toy stores assuming all else stays the same?

Prof. Angela


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