3. Tri-products is trying to decide whether to make-or-buy an accessory item for one of their products. It is projected that this item will sell for $10 each. If the item is outsourced, there is virtually no cost other than the $6 per unit that they would pay their supplier. Internally, they have two choices. equipment, but results in a $4 per unit cost. but its per unit cost is $5. Regardless of whether the item is subcontracted or produced internally, there is a 60% chance that they will sell 50,000 units, and a 40% chance that they will sell 100,000 units. Draw the decision tree appropriate to the alternatives and outcomes stated. Using decision trees and EMV, what is their best choice? Process A requires an investment of $120,000 for design and Process B requires only a $100,000 investment,
3. Tri-products is trying to decide whether to make-or-buy an accessory item for one of their products. It is projected that this item will sell for $10 each. If the item is outsourced, there is virtually no cost other than the $6 per unit that they would pay their supplier. Internally, they have two choices. equipment, but results in a $4 per unit cost. but its per unit cost is $5. Regardless of whether the item is subcontracted or produced internally, there is a 60% chance that they will sell 50,000 units, and a 40% chance that they will sell 100,000 units. Draw the decision tree appropriate to the alternatives and outcomes stated. Using decision trees and EMV, what is their best choice? Process A requires an investment of $120,000 for design and Process B requires only a $100,000 investment,
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:3. Tri-products is trying to decide whether to make-or-buy an accessory item for one of their
products. It is projected that this item will sell for $10 each. If the item is outsourced, there
is virtually no cost other than the $6 per unit that they would pay their supplier. Internally,
they have two choices.
equipment, but results in a $4 per unit cost.
but its per unit cost is $5. Regardless of whether the item is subcontracted or produced
internally, there is a 60% chance that they will sell 50,000 units, and a 40% chance that they will
sell 100,000 units. Draw the decision tree appropriate to the alternatives and outcomes stated.
Using decision trees and EMV, what is their best choice?
Process A requires an investment of $120,000 for design and
Process B requires only a $100,000 investment,
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