Question

Using the EV method, which decision alternative will you chose?
a) Sell company
b) Form Joint Venture
c) Sell software on own
Success Moderate Success Failure
Probability 0.3 0.3 0.4
Sell Company 76 76 76
Form Joint Venture 210 120 90
Sell Software on own 420 115 100
Answer format: Text

Answer 1

Compute EV for each alternative:

- Sell company: EV = 0.3(76)+0.3(76)+0.4(76) = 76
- Form joint venture: EV = 0.3(210)+0.3(120)+0.4(90) = 135
- Sell software on own: EV = 0.3(420)+0.3(115)+0.4(100) = 200.5

Choose: Sell software on own (highest EV = 200.5).