1. Company want to replace their equipment. The company has option to A. not change, B. Use second-hand but newer equipment, or C buy new equipment. Using original equipment will have a revenue of $6 million. Using second-hand equipment will have $10 million in revenue if it is" successful" ," but a $3 million loss if it "fails". Buy new equipment will have $4 million in revenue if it is "successful" and $1 million if it "fails". " The chance of being successful is 70 percent there is a 30 percent chance that changing equipment will fail." 
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3. Draw a decision tree, Calculate expected values for A, B, C, which should she choose?

Answer rating: 100% (QA)

Based on the expected values the company should choose option ... View the full answer