DE19-19 Consider the cost-benefit analysis for the GE quality program discussed on page 774. Suppose GE's managers

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DE19-19 Consider the cost-benefit analysis for the GE quality program discussed on page 774. Suppose GE's managers now estimate a 90% chance that the projects will yield an extra $20 million in benefits, and a 10% chance that the projects will yield an extra $80 million. What is the expected value of the additional benefits now? Assuming total costs remain $200 million, does this change your mind about whether the quality program was a worthwhile investment?

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Accounting

ISBN: 9780130906991

5th Edition

Authors: Charles T. Horngren, Walter T. Harrison, Linda S. Bamber, Betsy Willis, Becky Jones

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