Chapter 5 Problem 1 Expected Monetary Value Residents of Mill River have fond memories of ice skating at a local park. Joe, a local artist, has captured the experience in a drawing and is hoping to reproduce it and sell framed copies to current and former residents. He thinks that if the market is good he can sell 400 copies of the elegant version at $150 each. If the market is not good, he will sell only 300 at $100 each. He can make a deluxe version of the same drawing instead. He feels that if the market is good he can sell 500 copies of the deluxe version at $120 each. If the market is not good, he will sell only 400 copies at $90 each. Production costs will be approximately $25,000 for the elegant version and $20,000 for the deluxe version. He can also choose to do nothing. There is a 60% probability that the market is good and 40% probability that the market is not good. Do an EMV analysis and make a recommendation based on your analysis what Joe should do. AutoSave OFF @ @bv Chapter 5 Example sert Draw Page Layout Formulas Data Review View Tell me Au % conditional Formatting v o Font Alignment Number Format as Table C Cell Styles Cells Editing x foc B D E F G H Sales Unit Cost Total Revenue Expenses Net Revenue Probability EMV 100000 $ 75000 $ 550 $ 550 $ 55,000,000 $ 41,250,000 $ $ $ 55,000,000 41,250,000 0.6 $ 33,000,000 0.4 $ 16,500,000 $ 49,500,000 75000 $ 70000 $ 750 $ 750 $ 56,250,000 $ 52,500,000 $ 100,000 $ 100,000 $ 56,150,000 52,400,000 0.7 $ 39,305,000 0.3 $ 15,720,000 $ 55,025,000