Bill Holliday is not sure what she should do. He can either build a quadple

Bill Holliday is not sure what she should do. He can

either build a quadplex (i.e. a building with four

apartments) build a duplex gather additional information or simply do nothing. If he gathers additional

information the results could be either favorable or

unfavorable but it would cost him $3000 to gather

the information. Bill believes that there is a 50%u201350

chance that the information will be favorable. If the

rental market is favorable Bill will earn $15000

with the quadplex or $5000 with the duplex. Bill

doesn%u2019t have the financial resources to do both. With

an unfavorable rental market however Bill could

lose $20000 with the quadplex or $10000 with the

duplex. Without gathering additional information

Bill estimates that the probability of a favorable

rental market is 0.7. A favorable report from the

study would increase the probability of a favorable

rental market to 0.9. Furthermore an unfavorable report from the additional information would decrease

the probability of a favorable rental market to 0.4. Of

course Bill could forget all of these numbers and do

nothing. What is your advice to Bill?