Joe is the general manager responsible for the portfolio of automobiles sold by Trojan Motors and is planning his 2025 electric vehicle (EV) strategy.

1. Joe is initially focused on the EV sedan. Trojan Motors expects the demand for EV sedans to be 20,000 cars per year at their target sales price of $25,000 per car. His original plan was to build the electric batteries inhouse at a cost of $500 per car, but while attending a USC basketball game, he met up with Rudy, a fellow USC Trojan alumnus, and learned Rudy recently launched a battery business that can supply electric batteries to Trojan Motors for $400 per car.

   This is particularly intriguing to Joe since he is hearing rumors from his engineering manager that there is 15% chance Trojan Motors manufacturing line workers may strike this year. If that happens, Trojan Motors will need to hire temporary workers at an additional one-time cost of $50,000. If the workers do not strike, there is no cost. If Trojan Motors decides to outsource the manufacture of batteries, the burden of a potential strike will not impact Trojan Motors (the outsource partner will have to deal with their own employees and contingency if faced with a strike).

   Do you recommend Joe move forward with batteries manufactured in-house, or should he outsource the manufacture of the batteries to Rudys company? What is Trojan Motors expected profit?

   Outsource $492,000,000

2. BeforesigningthecontractwithRudy, the outsource partner, Joe heard they recently had a problem, and after investigating further, Joe believes the outsource partner has a 95% chance of successfully delivering batteries. If you select them and they fail to deliver, Trojan Motors will pay nothing to Rudys company but will need to go back to their in-house option. In addition to the in-house cost to manufacture the batteries, there will be a schedule delay costing Trojan Motors a one-time cost of $100,000. Does this new information change your decision from part (a)? Explain. What is the resulting expected profit?

   Outsource $491,894,625

3. Once Joe has his new EV sedans built and on the sales lot, he needs to decide if he should purchase hail insurance for the cars, so he is analyzing his monthly costs. The cost of insurance to cover all cars on the lot each month is $5,000 per month. Over the past few years, hail has been rare, with only a 1% chance each month. If insured, all hail damages would be covered, and the EV sedan could be sold for the full price of $25,000. If it hails, and Trojan Motors is not insured, the dents caused by the hail would reduce the price Trojan Motors could sell the cars from $25,000 to $24,000. If an average of 1500 EV sedans are on the lot each month, should Joe purchase hail insurance? Explain. What is Trojan Motors expected profit?

Purchase $37,495,000

Please show work on how to arrive at the above-bolded answers, thank you!