Asked by Thaiyanis Betancourt on Jun 02, 2024
Verified
{Video Business Narrative} Calculate the expected opportunity loss for each act with present information.What decision should be made using the EOL criterion?
Videography Business
A commercial enterprise that provides services related to filming, video editing, and production of visual content.
Expected Opportunity Loss
The anticipated loss of value from not choosing the best alternative option in a decision-making process.
- Learn to apply Expected Opportunity Loss (EOL) for the purpose of making the best decisions.
- Assess and quantify prospective gains under differing circumstances.
Verified Answer
FB
Farrah BonnotJun 06, 2024
Final Answer :
EOL (Start)= (0.4)(12,000)+ (0.4)(0)+ (0.2)(0)= $4,800 EOL (Don't start)= (0.4)(0)+ (0.4)(10,000)+ (0.2)(15,000)= $7,000 The best decision (the decision with the smallest EOL)is to start the new business.Hence,EOL* = $4,800.
Learning Objectives
- Learn to apply Expected Opportunity Loss (EOL) for the purpose of making the best decisions.
- Assess and quantify prospective gains under differing circumstances.
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