A television network earns an average of $65 million each season from a hit program and loses an average of $25 million each season on a program that turnsout to be a flop. Of all programs picked up...

A television network earns an average of $65 million each season from a hit program and loses an average of $25 million each season on a program that turnsout to be a flop. Of all programs picked up by this network in recent years, 30% turn out to be hits; the rest turn out to be flops. At a cost of C dollars, a market research firm will analyze a pilot episode of a prospective program and issue a report predicting whether the given program will end up being a hit. If the program is actually going to be a hit, there is a 65% chance that

the market researchers will predict the program to be hit. If the program is actually going to be a flop, there is only a 40% chance that the market researchers will predict the program to be a hit.

a. What is the maximum value of C that the network should be willing to pay the market research firm?

b. Calculate and interpret EVPI for this decision problem.