Respuesta :
Answer:
a. Large expansion Expected Monetary Value (EMV) of $50,000 is the largest.
b. Large expansion
Explanation:
a. what is the highest emv?
Large expansion Expected Monetary Value (EMV) = ($100,000 × 0.50) + ($10,000 × 0.25) - ($10,000 × 0.25) = $50,000
Medium expansion EMV = ($40,000 × 0.50) + ($40,000 × 0.25) + ($5,000 × 0.25) = $31,250
Small expansion EMV = ($15000 × 0.50) + ($15,000 × 0.25) + ($15,000 × 0.25) = $15,000
Large expansion Expected Monetary Value (EMV) of $50,000 is the largest.
b. which of the expansion plans should the manager choose?
Since the large expansion should be chosen by the manager since it has the highest EMV of $50,000.
Answer:
(A) The highest EMV is of large expansion = 50000
(B) The manager should choose large expansion plan since it provides highest EMV.
Explanation:
The expected monetary value(EMV) is how much money you can expect to make from a certain decision. To calculate EMV, multiply the dollar value of each possible outcome by each outcome's chance of occurring (percentage), and total the results.
(A)
EMV of Large expansion = (0.50 × 100,000) + ( 0.25 × 10000) - ( 0.25 × 10000) = 50,000
EMV of Medium expansion = ( 0.50 × 40000) + ( 0.25 × 40000) + ( 0.25 × 5000) = 31,250
EMV of Small Expansion = ( 0.50 × 15000 ) + ( 0.25 × 15000 ) + ( 0.25 × 15000 ) = 15,000
⇒ The highest EMV is of large expansion = 50000
(B)
The manager should choose large expansion plan since it provides highest EMV.
