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.
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.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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D2
![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 yr
(2)
Sales: $26k per year with a $35k overhaul in yr 4
Decide
Low demapd p=0.35
$100k acquisition cost
High demand p=0.65
Sales $45k/yr
10 x
Decide
12 yrs
Sales $35k per year with a $35k overhaul in yr 6](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fee9b0310-a8b2-4f9c-a903-e2bb5151557d%2F3bc6b93d-ee35-4dc4-8dca-4665bba4abc7%2Fhv1usa6_processed.png&w=3840&q=75)
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 yr
(2)
Sales: $26k per year with a $35k overhaul in yr 4
Decide
Low demapd p=0.35
$100k acquisition cost
High demand p=0.65
Sales $45k/yr
10 x
Decide
12 yrs
Sales $35k per year with a $35k overhaul in yr 6
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