Spring 2023 PM.340.WC2/PM.340.HSF2 Introduction to Project Management

Description

Problem Set #2: Decision Tree

This problem set covers material for Week 7, Risk Analysis. Decision Tree Analysis is an important aspect of Risk Management. It is mentioned, but not treated extensively in the text.

INSTRUCTIONS:

Review attached instructor video & slides for reference
Only problem #1 is required (#2 is optional)
Please show your work (and not just the answers) to get full credit.
Will review in week 7 class session.
Prob. 1. You must choose between the two projects below. What is the EMV for each? Looking at your own personal Risk Utility Function, which project would you select and why?Project 1 has a 70% chance of earning $500,000, and a 30% chance of losing $100,000. Project 2 has a 20% chance of earning $2 million, a 20% chance of earning $1 million, and a 60 percent chance of losing $500,000.
Prob. 2. You have $1,000,000 worth of equipment at the job site and wish to minimize your risk of direct property damage by taking out an insurance policy. The insurance company provides you with their statistical data as shown below.If the insurance company uses expected monetary value to calculate premiums, then how much would you expect the premium to be, assuming the insurance company adds on $300 for handling and profit? (Hint: Remember that translating a probability of 0.02% to a decimal equivalent equals 0.0002.) Type of DamageProbability (%)Amount of Damage (Loss) ($)Total0.02100Medium0.0840Low0.1020No Damage99.80

2 attachments

Slide 1 of 2

attachment_1

attachment_1
attachment_2

attachment_2

Unformatted Attachment Preview

0
0
0
Converted to
Decimal
0
0
0
$
$
$
–
0
0
0
0
0
0
$
$
$
–
Probability (%)
Project 1
Value
EMV
SUBTOTAL
Project 2
SUBTOTAL
$
$
$
$
$
$
$
$
–
Type of
Damage
Total
Medium
Low
No Damage
SUBTOTAL
Add’l Cost
Premium
Probability (%)
0
0
0
0
Converted to
Amount of
Value of Damage
Decimal
Damage (Loss) (%)
0
0
0
0
0
0
0
0
$
$
$
0
EMV of Damage
$
$
$
0
$
$
$
–

Purchase answer to see full
attachment

Explanation & Answer:

2 Problems

User generated content is uploaded by users for the purposes of learning and should be used following our honor code & terms of service.



^{Have a similar assignment? "Place an order for your assignment and have exceptional work written by our team of experts, guaranteeing you A results."}

Our Service Charter

1. Professional & Expert Writers: Essay Noon only hires the best. Our writers are specially selected and recruited, after which they undergo further training to perfect their skills for specialization purposes. Moreover, our writers are holders of masters and Ph.D. degrees. They have impressive academic records, besides being native English speakers.

2. Top Quality Papers: Our customers are always guaranteed of papers that exceed their expectations. All our writers have +5 years of experience. This implies that all papers are written by individuals who are experts in their fields. In addition, the quality team reviews all the papers before sending them to the customers.

3. Plagiarism-Free Papers: All papers provided by Essay Noon are written from scratch. Appropriate referencing and citation of key information are followed. Plagiarism checkers are used by the Quality assurance team and our editors just to double-check that there are no instances of plagiarism.

4. Timely Delivery: Time wasted is equivalent to a failed dedication and commitment. Essay Noon are known for the timely delivery of any pending customer orders. Customers are well informed of the progress of their papers to ensure they keep track of what the writer is providing before the final draft is sent for grading.

5. Affordable Prices: Our prices are fairly structured to fit in all groups. Any customer willing to place their assignments with us can do so at very affordable prices. In addition, our customers enjoy regular discounts and bonuses.

6. 24/7 Customer Support: At Essay Noon, we have put in place a team of experts who answer all customer inquiries promptly. The best part is the ever-availability of the team. Customers can make inquiries anytime.