2009-08-31, 09:54 PM
Well, you also have to consider the average cost of success, since it only happens 70% of the time.
0 = 0.7*(I - 10B) + 0.3*(-B)
0 [assumption: no value gained or lost by appraising] = 0.7*(I - 10B) [0.7 chance of gaining I and losing 10B] + 0.3*(-B) [0.3 chance of losing B]
0 = 0.7*(I - 10B) + 0.3*(-B)
0 [assumption: no value gained or lost by appraising] = 0.7*(I - 10B) [0.7 chance of gaining I and losing 10B] + 0.3*(-B) [0.3 chance of losing B]