Please discuss and solve problem 8 on page 125 of the textbook. 8. Expando, Inc., is considering the possibility of building an additional factory that would product a new addition to its product line. The company is currently considering two options. The first is a small facility that it could build at a cost of $6 million. If demand for new products is low, the company expects to receive $10 million in discount revenues (present value of future revenues) with the small facility. On the other hand, if demand is high it expects $12 million in discounted revenues using the small facility. The second option is to build a large factory at a cost of $9 million. Were demand to be low, the company would expect $10 million in discounted revenues with the large plant. If demand is high, the company estimates that the discounted revenues would be $14 million. In either case, the probability of demand being high is .40, and the probability of it being low is .60. Not constructing a new factory would result in no additional revenue being generated because the current factories cannot product these new products. Construct a decision tree to help Expando make the best decision.

https://d2vlcm61l7u1fs.cloudfront.net/media%2Fa4c%2Fa4c9761c-af33-4210-84eb-3c0f70fc494f%2FphpVgz7SZ.pnghttps://d2vlcm61l7u1fs.cloudfront.net/media%2F07d%2F07d02e58-7e28-4520-b796-529458fd38cc%2FphpduTA93.png
 
“Looking for a Similar Assignment? Get Expert Help at an Amazing Discount!”

What Students Are Saying About Us

.......... Customer ID: 12*** | Rating: ⭐⭐⭐⭐⭐
"Honestly, I was afraid to send my paper to you, but splendidwritings.com proved they are a trustworthy service. My essay was done in less than a day, and I received a brilliant piece. I didn’t even believe it was my essay at first 🙂 Great job, thank you!"

.......... Customer ID: 14***| Rating: ⭐⭐⭐⭐⭐
"The company has some nice prices and good content. I ordered a term paper here and got a very good one. I'll keep ordering from this website."

"Order a Custom Paper on Similar Assignment! No Plagiarism! Enjoy 20% Discount"