Question
A company wishes to go ahead with one of three mutually exclusive projects, but the profit outcome from each project will depend on the strength
A company wishes to go ahead with one of three mutually exclusive projects, but the profit outcome from each project will depend on the strength of sales demand, as follows.
|
| Strong demand profit $ | Moderate demand profit $ | Weak demand profit (loss) $ |
| Project 1 | 70,000 | 10,000 | (7,000) |
| Project 2 | 25,000 | 12,000 | 5,000 |
| Project 3 | 50,000 | 20,000 | (6,000) |
|
|
|
|
|
| Probability of demand | 0.1 | 0.4 | 0.5 |
Instructions:
What is the value to the company of obtaining this perfect market research information, ignoring the cost of obtaining the information?
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Organizational Change
Authors: Barbara Senior, Stephen Swailes
5th Edition
1292063831, 9781292063836
