Question: A manager is trying to decide whether to build a small, medium, or large facility. Demand can be low, average, or high, with the estimated
A manager is trying to decide whether to build a small, medium, or large facility. Demand can be low, average, or high, with the estimated probabilities being
and respectively.
A small facility is expected to earn an aftertax net pres
ent value of just $ if demand is low. If demand is average, the small facility is expected to earn $; it can be increased to medium size to earn a net present value of $ If demand is high, the small facility is expected to
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