You Must Decide Whether To Buy New Machinery To Produce Product X Or To Modify Existing Machinery You Believe The Proba 1 (50.27 KiB) Viewed 19 times
You Must Decide Whether To Buy New Machinery To Produce Product X Or To Modify Existing Machinery You Believe The Proba 2 (50.78 KiB) Viewed 19 times
You must decide whether to buy new machinery to produce product X or to modify existing machinery. You believe the probability of a prosperous economy next year is 0.8. Prepare a decision tree and use it to calculate the expected value of the buy new option. The payoff table is provided below (+ for profits and for losses). When entering the answer, do not use the $ symbol. Do not enter the thousand separator. Enter up to 2 decimal places after the decimal point. For example, $6,525.35 must be entered as 6525.35 N1: Prosperity N2: Recession ($) A1 (Buy New) $984,403 A2(Modify) $794,148 $-150,000 $279,514
You must decide whether to buy new machinery to produce product X or to modify existing machinery. You believe the probability of a prosperous economy next year is 0.6. Prepare a decision tree and use it to calculate the expected value of the modify option. The payoff table is provided below (+ for profits and for losses). When entering the answer, do not use the $ symbol. Do not enter the thousand separator. Enter up to 2 decimal places after the decimal point. For example, $6,525.35 must be entered as 6525.35 A1 (Buy New) A2(Modify) N1: Prosperity N2: Recession ($) ($) $968,185 $870,170 $-150,000 $260,281
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