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# Crops

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Joined: 22 May 2007
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06 Nov 2007, 23:57
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Under frost-free conditions, Cal Cultivators expects its strawberry crop to have a $60,000 market value. An unprotected crop subject to frost has an expected market value of$40,000. If Cal protects the strawberries against frost, then the market value of the crop is still expected to be $60,000 under frost-free conditions and$90,000 if there is a frost. What must be the probability of a frost for Cal to be indifferent to spending $10,000 for frost protection? .167 .200 .250 .333 .350 SVP Joined: 29 Aug 2007 Posts: 2476 Followers: 70 Kudos [?]: 774 [0], given: 19 Re: Crops [#permalink] ### Show Tags 07 Nov 2007, 01:17 Hayabusa wrote: Under frost-free conditions, Cal Cultivators expects its strawberry crop to have a$60,000 market value. An unprotected crop subject to frost has an expected market value of $40,000. If Cal protects the strawberries against frost, then the market value of the crop is still expected to be$60,000 under frost-free conditions and $90,000 if there is a frost. What must be the probability of a frost for Cal to be indifferent to spending$10,000 for frost protection?

.167
.200
.250
.333
.350

x (90,000 - 40,000) + (1-x) (60000 - 60000) = 10000
x = 10000/50000
x = 0.2 or 20%.
Re: Crops   [#permalink] 07 Nov 2007, 01:17
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