The profitability your wind farm will be affected by whether California passes more sustainable energy requirements....
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The profitability your wind farm will be affected by whether California passes more sustainable energy requirements. There is 80% chance the measure will pass, but you need to decide RIGHT NOW from the following options: 1. Buy a large piece of land, 2. Buy a small piece of land, 3. Put your money in Municipal bonds (boring) If you buy the large land, and it passes, you can build a big a farm, or a small one. If it fails, you would just build the small wind farm. If you buy the small land, pass or fail, you can either build the small wind farm, or open a goat farm. All profit numbers are lifetime net profits (in millions). a. b. Compute the expected profits of the three options Which decision maximizes your expected profits? Which provides the best guaranteed net profits? Large Small Pass Fail Pass Fail Municipal Bonds Big Wind Small Wind Small Wind Small Wind Goats Small Wind Goats 120 40 20 50 5 25 5 20 The profitability your wind farm will be affected by whether California passes more sustainable energy requirements. There is 80% chance the measure will pass, but you need to decide RIGHT NOW from the following options: 1. Buy a large piece of land, 2. Buy a small piece of land, 3. Put your money in Municipal bonds (boring) If you buy the large land, and it passes, you can build a big a farm, or a small one. If it fails, you would just build the small wind farm. If you buy the small land, pass or fail, you can either build the small wind farm, or open a goat farm. All profit numbers are lifetime net profits (in millions). a. b. Compute the expected profits of the three options Which decision maximizes your expected profits? Which provides the best guaranteed net profits? Large Small Pass Fail Pass Fail Municipal Bonds Big Wind Small Wind Small Wind Small Wind Goats Small Wind Goats 120 40 20 50 5 25 5 20
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Related Book For
Management Accounting Information for Decision-Making and Strategy Execution
ISBN: 978-0137024971
6th Edition
Authors: Anthony A. Atkinson, Robert S. Kaplan, Ella Mae Matsumura, S. Mark Young
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