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There's a% chance that a component you are going to license will be dif cult to integrate and cost $ in rework and delays. There's also a% chance that the component will save $, in time and effort that would have been used to build the component from scratch. What's the EMV for these two possibilities? A. - $ B. $3, C. $7, D. $,
Answer: BExplanation: The expected monetary value (or EMV) of the problems integrating the component is the probability (20%) times the cost ($3,000), but don't forget that since it's a risk, that number should be negative. So its EMV is 20% x $3,000 = -$600. The savings from not having to build the component from scratch is an opportunity. It has an EMV of 40% x $10,000 = $4,000. Add them up and you get -$600 + $4,000 = $3,400.
