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In considering expansion to increase Polyethylene Production capacity at PT ABC , we have two alternatives. The first alternative purchasing a BASF Technology License costs
In considering expansion to increase Polyethylene Production capacity at PT ABC , we have two alternatives. The first alternative purchasing a BASF Technology License costs $1,000,000 and has an expected profit of $500,000 over the next three years. The second alternative is purchasing the Dow Chem Technology License . expected costs of $800,000 and expected profits of $450,000 over the next three years. Which alternative should we choose, and what is the expected value of the expansion? Assume an interest rate of 10 percent
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