Two firms share customers in the same market, Firm A sampled its customers' buying habits and found that about 70% of its customers were repeat customers each week, while 30% went to Firm B. Firm B found that 80% of its customers remained loyal each week, while 20% switched to Firm A. If this retention and loss of customers continues B Chapter 12 12. for a long period, the percentage of customers. Firm A will have 70%. с. 60%. 40%. (CMA, Adapted) a. d. b. 80%. Two projects are going to be implemented. The probability for positive 13. cash flows in each one is 1/2, and the probability for negative cash flowe in each one is 1/2. What is the probability that at least one of the projecte will have positive cash flows? 0.5 с. 0.75 а. b. 0.67 d. 0.95 14. Pongky Company's managers are attempting to value a piece of land that they own. One potential occurrence is that the old road that borders the land gets paved. Another possibility is that the road does not get paved. A third outcome is that the road might be destroyed and completely replaced by a new road. Based on the following future states of nature, their probabilities, and subsequent values of the land, what is the expected value of the land? Future States of Nature (SN) SN 1: Current road gets paved SN 2: Road does not get paved SN 3: Current road destroyed and replaced Probability 0.5 0.4 with new road 0.1 Estimates of land value under each possible future state of nature: Value if SN 1: P200,000 Value if SN 2: P100,000 Value if SN 3: P550,000 P133,333 b. P195,000 a. C. P225,000 d. P283,333

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398 Chapter 12
12.
for a long period, the percentage of customers. Firm A will have:
70%.
с.
60%.
40%.
(CMA, Adapted)
a.
d.
b.
80%.
13.
cash flows in each one is 1/2, and the probability for negative cash flowe
in each one is 1/2. What is the probability that at least one of the projecte
will have positive cash flows?
0.5
с.
0.75
а.
b.
0.67
d.
0.95
14. Pongky Company's managers are attempting to value a piece of land
that they own. One potential occurrence is that the old road that borders
the land gets paved. Another possibility is that the road does not get
paved. A third outcome is that the road might be destroyed and
completely replaced by a new road. Based on the following future states
of nature, their probabilities, and subsequent values of the land, what is
the expected value of the land?
Future States of Nature (SN)
SN 1: Current road gets paved
SN 2: Road does not get paved
SN 3: Current road destroyed and replaced
Probability
0.5
0.4
with new road
0.1
Estimates of land value under each possible future state of nature:
Value if SN 1: P200,000
Value if SN 2: P100,000
Value if SN 3: P550,000
P133,333
b. P195,000
a.
P225,000
d. P283,333
с.
Transcribed Image Text:398 Chapter 12 12. for a long period, the percentage of customers. Firm A will have: 70%. с. 60%. 40%. (CMA, Adapted) a. d. b. 80%. 13. cash flows in each one is 1/2, and the probability for negative cash flowe in each one is 1/2. What is the probability that at least one of the projecte will have positive cash flows? 0.5 с. 0.75 а. b. 0.67 d. 0.95 14. Pongky Company's managers are attempting to value a piece of land that they own. One potential occurrence is that the old road that borders the land gets paved. Another possibility is that the road does not get paved. A third outcome is that the road might be destroyed and completely replaced by a new road. Based on the following future states of nature, their probabilities, and subsequent values of the land, what is the expected value of the land? Future States of Nature (SN) SN 1: Current road gets paved SN 2: Road does not get paved SN 3: Current road destroyed and replaced Probability 0.5 0.4 with new road 0.1 Estimates of land value under each possible future state of nature: Value if SN 1: P200,000 Value if SN 2: P100,000 Value if SN 3: P550,000 P133,333 b. P195,000 a. P225,000 d. P283,333 с.
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