A coat manufacturer wants to build a large factory or a small factory. The profit per coat is estimated as $12. Per year, a small factory's cost is $200,000, with a production capacity of 50,000 coats and a large factory's cost is $450,000, with a production capacity of 100,000 coats. The four levels of manufacturing demand th are considered likely are 30,000, 40,000, 50,000, and 100,000 coats per year. Complete parts (a) through (e). (...) a. Determine the payoffs for the possible levels of production for a small factory. Manufacturing demand (coats per year) Payoff ($) 30,000 40,000 50,000 100,000 (Simplify your answers)
A coat manufacturer wants to build a large factory or a small factory. The profit per coat is estimated as $12. Per year, a small factory's cost is $200,000, with a production capacity of 50,000 coats and a large factory's cost is $450,000, with a production capacity of 100,000 coats. The four levels of manufacturing demand th are considered likely are 30,000, 40,000, 50,000, and 100,000 coats per year. Complete parts (a) through (e). (...) a. Determine the payoffs for the possible levels of production for a small factory. Manufacturing demand (coats per year) Payoff ($) 30,000 40,000 50,000 100,000 (Simplify your answers)
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:A coat manufacturer wants to build a large factory or a small factory. The profit per coat is estimated as $12. Per year, a small factory's cost is $200,000, with a
production capacity of 50,000 coats and a large factory's cost is $450,000, with a production capacity of 100,000 coats. The four levels of manufacturing demand that
are considered likely are 30,000, 40,000, 50,000, and 100,000 coats per year. Complete parts (a) through (e).
a. Determine the payoffs for the possible levels of production for a small factory.
Manufacturing demand (coats per year)
Payoff ($)
30,000
40,000
50,000
100,000
(Simplify your answers.)
Transcribed Image Text:A coat manufacturer wants to build a large factory or a small factory. The profit per coat is estimated as $12. Per year, a small factory's cost is $200,000, with a
b. Determine the payoffs for the possible levels of production for a large factory.
Manufacturing demand (coats per year)
Payoff ($)
30,000
40,000
50,000
100,000
(Simplify your answers.)
c. Based on the results of (a) and (b), construct a payoff table, indicating the events and alternative courses of action.
Alternative Course of Action
Small factory, A ($) Large factory, B ($)
Event
Demand of 30,000 coats/year, 1
Demand of 40,000 coats/year, 2
Demand of 50,000 coats/year, 3
Demand of 100,000 coats/year, 4
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