week 7 - Question 17.1 Should enter Singapore Expected...

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Question 17.1Should enter Singapore. Expected sales are higher. Costs of entry are the same across the board so makes sense to go with Singapore. Expected total profit is $890,000Question 17.2So, it makes sense to play. The question of what is the lowest probability of success would still make the play profitable can be answered as follows:P (probability percent) = (loss or gain)/$1,000,000 because the question wants to determine at what percent (P) would return a higher return than the possible loss of $500,000. But because both probability percentages must equal 100%, the lower the percent of success increases the percent of loss. The maximum gain is $1,000,000 and the maximum loss is $500,000. Whatever the percent of success result is (in $), it must be more than the percent of loss result.So, the new equations look like this:Ps (percent of success) = G (gain)/$1,000,000Ploss (1 - Ps) = L (loss)/$1,000,000Also, we know that G must be more than L to make sense. If G is $500,000 and L is $250,000 at a 50/50 split in probability, then we must find a number between $500,000 an $250,000 for G.

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