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
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
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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