A project Manager needs to take a flight to visit a client. He has choice of Airline A OR Airline B. Airline A - fare is $1000 and 65% of ON TIME and $0.  35% of Late with $1000.

Airline B - fare is $5000 with 95% of ontime and $0. with 5% of late impact is $1000.

Ans:

A) Airline A with an EMV of $650

B) Airline A with an EMV of $4950

c) Airline B with an EMV of $1350 and

d) Airline B with an EMV of $4950

When I calculate the above problem,

Airline A = $1000 +65%of $0 +35% of (-1000) = $1000 -$350 = $650

Choosing Airline B = $5000 + 95% of 0 +5% of (-$1000) = $5000 -50 = $4950

When I compare Airline A and Airline B, obviously Airline A is cheaper.  But, the answer is given as Airline B - (D) is the right answer. i.e. larger of $650 and $4950. 

I am NOT clear why they have chosen Airline B.  Please explain me. Advance Thanks.

Sankara

Hi 

I have seen few links but still it is not clear to me.  It seems in the you tube they have taken the higher value but in the Rita example it is the lower value. I'm confused. Please help me

Advance thanks.

Sankara