4. Determine the probability that the following tree reflecting demand for a product, given an expense of acquiring the necessary equipment of $100k, has a rate of return higher than 30% per year. $100k acquisition cost Low demand p=0.35 High demand p=0.65 Decide Decide 4 yrs yrs 10 yrs 12 yrs 2 Sales: $27k/yr Sales: $26k per year with a $35k overhaul in yr 4 Sales $45k/yr Sales $35k per year with a $35k overhaul in yr 6

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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Determine the probability that the following tree reflecting demand for a product, given an expense of
acquiring the necessary equipment of $100k, has a rate of return higher than 30% per year.
4.
Sales: $27k/yr
4 ycs
Decide
Sales: $26k per year with a $35k overhaul in yr 4
Low demapd p=0.35
$100k acquisition cost
High demand p=0,65
Sales $45k/yr
10 yS
Decide
12 ycs
Sales $35k per year with a $35k overhaul in yr 6
Transcribed Image Text:Determine the probability that the following tree reflecting demand for a product, given an expense of acquiring the necessary equipment of $100k, has a rate of return higher than 30% per year. 4. Sales: $27k/yr 4 ycs Decide Sales: $26k per year with a $35k overhaul in yr 4 Low demapd p=0.35 $100k acquisition cost High demand p=0,65 Sales $45k/yr 10 yS Decide 12 ycs Sales $35k per year with a $35k overhaul in yr 6
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