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A holiday company, Dreamliner Inc. is considering purchasing a cruise ship to provide services to holidaymakers to a Caribbean Island. The company has to decide

A holiday company, Dreamliner Inc. is considering purchasing a cruise ship to provide services to holidaymakers to a Caribbean Island. The company has to decide on whether to purchase a large ship or a small ship. The decision on the size of the cruise ship depends on the future demand prospects for holiday services from the company (high or low demand). It is projected that future demand will be high at 60 percent. If the company decides to purchase a large ship and future demand is high, the company makes GH500,000, and -GH 180.000 (i.e, a loss) if future demand is low. However, if the company decides at the initial period to purchase a small ship, it still faces future demand uncertainty, which could be high or low. If future demand is low, the company makes GHc150,000. If demand is high, the company has to decide whether to add a medium or another smaller size ship. If the company adds a medium or smaller size ship, it once again faces future demand uncertainty, with a 50-50 chance of high or low demand in relation to the two ships it now owns. In this case, the total returns from adding a medium ship is GH700,000 when demand is high. and -GH 120.000 (i.e, a loss) when demand is low. Similarly, if the company adds a smaller size ship, the associated retuns is expected to be of GHc400,000 when demand is high, and GH 120.000, when demand is low. According to the above information, the expected payoff if Dreamliner goes for a smaller ship, adds a medium ship when demand is high, but then demand turns out to be low after adding the medium ship will be GHC Note: Do not add a comma in your answer. For example, GHC5,000 must be written GHC5000

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