Hi Zeke, Thanks for the clarification and the estimate for Y. If I understand correctly:
(1) Minimum success probability for project viability is ~0.5% (Y=0.5%)
(2) Upside following success is 33B$*10 years = 330B$ (per your earlier estimate, this needs to be adjusted for many different reasons, both up and down, but these adjustments are beyond my capabilities).
(3) Cost is 500K$.
(4) Expected ROI is = (330B$ * 0.5%) / 500K$ = 3300.
So this means if you find a 100$ bill on the sidewalk and giving it away to someone else statistically gives them ~300K$, you will keep it, but if it statistically gives them 400K$ you will give it away. Is that right?
Hi Zeke, Thanks for the clarification and the estimate for Y. If I understand correctly:
(1) Minimum success probability for project viability is ~0.5% (Y=0.5%)
(2) Upside following success is 33B$*10 years = 330B$ (per your earlier estimate, this needs to be adjusted for many different reasons, both up and down, but these adjustments are beyond my capabilities).
(3) Cost is 500K$.
(4) Expected ROI is = (330B$ * 0.5%) / 500K$ = 3300.
So this means if you find a 100$ bill on the sidewalk and giving it away to someone else statistically gives them ~300K$, you will keep it, but if it statistically gives them 400K$ you will give it away. Is that right?
Only if this project is assumed to be the best available use of funds. Other things may be better.