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MacDonald Products, Inc., of Clarkson, New York, has the option of (a) proceeding immediately with production of a new top-of-the-line stereo TV that has just

image text in transcribed MacDonald Products, Inc., of Clarkson, New York, has the option of (a) proceeding immediately with production of a new top-of-the-line stereo TV that has just completed prototype testing or (b) having the value analysis team complete a study. If Tyrone Martin, VP for operations, proceeds with the existing prototype (option a), the firm can expect sales to be 85,000 units at $540 each, with a probability of 0.79 and a 0.21 probability of 70,000 at $540. If, however, he uses the value analysis team (option b), the firm expects sales of 90,000 units at $730, with a probability of 0.76 and a 0.24 probability of 70,000 units at $730. Value engineering, at a cost of $85,000, is only used in option b. Which option has the highest expected monetary value (EMV)? The EMV for option a is $ and the EMV for option b is $ Therefore, option has the highest expected monetary value. (Enter your responses as integers.)

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