Bill Shaffer estimates that if he does 10 hours of research using data that will cost $75, there is a good chance that he can improve his expected return on a $10 000 one-year investment from 8% to 10%. Bill feels that he must earn at least $10 per hour on the time he devotes to his research.
a. Find the cost of Bill’s research.
b. By how much (in dollars) will Bill’s return increase as a result of the research?
c. On a strict economic basis, should Bill perform the proposed research?
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