The Local Operations Manager for the Internal Revenue Service Must

Multiple Choice

The local operations manager for the Internal Revenue Service must decide whether to hire one, two, or three temporary tax examiners for the upcoming tax season. She estimates that net revenues (in thousands of dollars) will vary with how well taxpayers comply with the new tax code just passed by Congress, as follows:

If she feels the chances of low, medium, and high compliance are 20 percent, 30 percent, and 50 percent respectively, what is her expected value of perfect information?

A) $16,000
B) $26,000
C) $46,000
D) $48,000
E) $50,000