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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 -

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 120,000 units at $540 each, with a probability of 0.78 and a 0.22 probability of 80,000 at $540. If, however, he uses the value analysis team (option b), the firm expects sales of 85,000 un $770, with a probability of 0.75 and a 0.25 probability of 60,000 units at $770. Value engineering, at a cost of $105,000, 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 ,grad has the highest expected monetary value. (Enter your responses integers.)
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