Question: Decision 1: Continue development and market the new product Fixed cost= $6,000 Unit margin= $18 Great Market Conditions: 52% probability that 600 units will be

Decision 1: Continue development and market the new product

Fixed cost= $6,000

Unit margin= $18

Great Market Conditions: 52% probability that 600 units will be sold

Fair Market Conditions: 38% probability that 300 units will be sold

Awful Market Conditions: 10% probability that 90 units will be sold

Decision 2: Stop development and abandon product

No payoffs,

No costs,

No uncertainty

EMV $0

Calculate the EVM for Decision 1.

Decision Tree Analysis (10 pts):

Decision 1: Continue development and market the new product

Fixed cost= $6,000

Unit margin= $18

Great Market Conditions: 52% probability that 600 units will be sold

Fair Market Conditions: 38% probability that 300 units will be sold

Awful Market Conditions: 10% probability that 90 units will be sold

Decision 2: Stop development and abandon product

No payoffs,

No costs,

No uncertainty

EMV $0

Calculate the EVM for Decision 1.

A) $1,830

B) $1,887

C) $1,027

D) $1,994

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related General Management Questions!

You have just been hired at ABC Manufacturing, and your supervisor has invited you to sit in on today's budget meeting. You are given a copy of the following proposed budget for next year to review....

Perform a sensitivity analysis on the probability of a great market. To do this, enter formulas in cells B9 and B10 (see Figure 6.4) to ensure that the probabilities of "fair" and "awful" remain in...

Decision 1: Continue development and market the new product % decrease in all sales volumes 0% Fixed cost $8,000 EMV for decision 1 -$1,498 Unit margin $15 sensitivity analysis to percentage decrease...

"CAPSIM" CORE Can anyone pleassseee help our team to get rid out from emergency loan? We're in round 6 now and need suggestions!! We have no idea how to get into normal plzzz help us We wanna be in...

CAPSIM_ How do we get out of emergency loan status? CAPSIMCore ZP100118_1 Round 3 -2024 Report Contents Section 1 Research and Development Section 4 Production Section 6 Product Financials Section 2...

Please see attachment and answer all questions. 17 questions 1. At the end of January, Mineral Labs had an inventory of 955 units, which cost $12 per unit to produce. During February, the company...

To answer these questions, you will need to read Chapter 9, Market Equilibrium & Product Price - Imperfect Competition and please good Good format. #. Explain the 3 types of "Imperfect" market...

I need Help putting the notes from the word document into the excel spreadsheet AutoSave OFF os 5- w Lab 6 BS STUDENT - Saved to my Mac Home Insert Draw Design Layout References Mailings Review View...

Acme Company is trying to decide whether to market a new product. As in many new-product situations, there is considerable uncertainty about the eventual success of the product. The product is...

BCO 313: Negotiation at Work Anne Dwyer: a.dwyer@euruni.edu Negotiation at Work \"Managers and executives negotiate constantly over issues as varied as hiring decisions and purchases, corporate...

After reading the case study, you are to respond to the questions for discussion at the end of the case. The questions are listed below: 1. Why do you think Starbucks has been so concerned with...

Mohammed and Salima have been married for 35 years. Mohammed is 66 years old; Salima is 62 years old. Both individuals have contributed to the CP for 40 years and both individuals are currently...

Please prove the following two expressions: (1) In the Cartesian coordinate system, prove a a A x B= A1 A2 A3 B B B3 (2) In the cylindrical coordinate system, prove Ax A, cos o = sin o 0 -sino cos o...

A corporation undertakes evaluation allowance analysis to determine if a deferred tax asset would should be recognized on the balance

Water Sport Inc. manufactures a small personal water tube used for children learning to swim. Management is now preparing detailed budgets for the third quarter, July through September, and has...