Suppose your organization is deciding which of THREE projects to bid on. The information oreach is in the Table 2 below. Assume that all up-front investments are not recovered, so theare shown as negative profits.Table 2: Three Projects DetailsEstimatedProbability (P)Profits/LossesProject A50%RM120,00050%(RM50,000)Project B30%RM100,00040%RM50,00030%(RM60,000)Project C70%RM20,00030%(RM5,000)Tasks:(a) Calculate the Expected Monetary Value (EMV) for each project. Then, insert all the detail:into the table.(b) Based on your result, explain on which projects you would bid. Be sure to use the EMVinformation and your personal risk tolerance to justify your answer.

Answered: Suppose your organization is deciding…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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2. Determine the course of action that has the highest expected payoff for the decision tree below! $1.0* $1.3 Do nothing Medium demand (.5) Large demand (.1) Small demand (.4) Expand $1.3 Do nothing Expand $1.5 $1.6 Build $1.8 Do nothing Other use #1 $0.7 $1.5 Small demand (.4) Medium demand (.5) Other use #2 $1.0 Expand $1.6 Large demand (. 1) Do nothing Subcontract $1.6 $1.5 Build $1.7 Do nothing Other use #1 ($0.9) $1.4 Small demand (.4) Medium demand (.5) Other use #2 $1.0 Do nothing Other use #1 $1.0 Large demand (.1) $1.1 Other use #2 $0.9 * Net present value in millions $2.4 Subcontract Build
Calculate the sales variance in dollars and the sales variance as a percentage given the following information: last year's sales $2,825,000; this year's sales $3,000,500. $5,825,500 and 9.41% $175,500 and 6.21% $5,825,500 and 10.62% $175,500 and 9.41%
Background: There are 3 investment projects faced by the ABC company. Given the decision tree, which project should ABC undertake? 0.17 $30,000 $3,20 0.2 $10,000 0.6 $-7,000 Project 1 $1,40 0.8 $2,000 Project 2 0.2 $-1,000 Project 3 $5,000 1000
The local high school soccer club need to borrow to finance a new soccer field. Repayment of the loan involves payments of $10 000.00 at the end of every 3 months for 8 years. No payments are to be made during the development period of 5 years. If interest is 8% compounded quarterly, how much did the Achievers borrow? a) $162 064.83 b) $234 683.35 c) $157 935.17 d) $175.935.71 e) $320 000.00 .
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Suppose you're a financial analyst at a company, and you are recommending whether the company should invest in Project A or Project B. Each of the two projects has been proposed by a lead engineer, but the company can only invest in creating one of them this year, and so your manager wants you to give her advice on which one to invest in. Your company's WACC is 9%. Project A Project 8 Year Cash Flow Year Cash Flow $3 ilio, ntialinvestment $2 milion proft $4 ilion pofit $A milion proft $2 milion proft $0, projet loseout $3 ilion, ntia ivestment $0 $0 $0 $0 $14 milion poit 1 1 2 2 3 3 4 4 5 5 Calculate the net present value (NPV) of and decide which one is better. S 유
9
Risk Aversion; Strategy John Holt is the production supervisor for ITEXX, a manufacturer of plastic parts with customers in the automobile and consumer products industries. On aTuesday morning, one of ITEXX’s sales managers asks John to reschedule his manufacturingjobs for the rest of the week to accommodate a special order from a new customer. The catchis that getting the customer requires fast turnaround on the order and means not only delayingthe current production schedule, but also running the production equipment all three shifts forthe remainder of the week. This will make it impossible to complete the regularly scheduledmaintenance on the equipment that John has planned for midweek. The sales manager is keen ongetting the new customer, which could mean an important increase in overall sales and output atthe plant. However, John is worried not only about the delay of the current jobs, but the chancethat the delay in maintenance will cause one of the machines to fail, which would…
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A suburban retail property in Arlington, Virginia with 60,000 square feet and 600 surface parking spaces was purchased for $6,000,000 at a cap rate of 6.0% with a 60% LTV interest-only loan at a 6% annual interest rate. If after six years the property appreciated by 60%, what would be the amount of the owner’s equity in the property at that time? a. $6,000,000 b. $2,400,000 c. $3,600,000 d. $9,600,000
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1. Kirsten is trying to decide where to go for her well-earned vacation. She would like to camp, but if the weather is bad, she will have to go to a motel. Given the costs and probabilities of bad weather given below, which destination should she choose? Camping cost Motel cost Probability of bad weather Nevada $21.2 $80.9 0.2 Oregon $15.9 $84.6 0.4 California $30 $95 0.1 a. California, because its EMV = $33.14 b. Nevada, because its EMV = $33.14 c. California, because its EMV = $36.5 d. Any of the 3 choices. e. Oregon, because its EMV = $43.38 f. Nevada, because its EMV = $43.38 g. None of the 3 choices. h. Oregon, because its EMV is $36.50.

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