MG375 Week 2 Homework

MG375 Week 2 Homework - Example 4.2 - Decision trees Value...

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Example 4.2 - Decision trees Value Revenue Build Cost Strong Growth \$765,000 \$975,000 \$210,000 0.55 Move \$585,000 Weak Growth \$365,000 \$575,000 \$210,000 0.45 Strong Growth \$863,000 \$950,000 \$87,000 0.55 \$703,750 Expand \$660,500 Weak Growth \$413,000 \$500,000 \$87,000 0.45 Expand \$843,000 \$930,000 \$87,000 Strong Growth \$850,000 0.55 Do Nothing \$703,750 Do Nothing \$850,000 \$850,000 \$0 Weak Growth \$525,000 \$525,000 \$0 0.45 Chapter 4, Problem 5 Value Revenue Building Cost High demand \$4,800,000 \$12,000,000 \$6,000,000 0.4 Small Facility \$4,800,000 Low demand \$6,000,000 \$10,000,000 \$6,000,000 0.6 High demand \$5,600,000 \$14,000,000 \$9,000,000 0.4 \$4,800,000 Large Facility \$2,600,000 Low demand \$6,000,000 \$10,000,000 \$9,000,000 0.6 High demand \$0 \$0 \$0 0 Do Nothing \$0 Low demand \$0 \$0 \$0 0 Hacker's Computer Store Expando Additional Factory

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Exhibit 4.4 - Decision Tree Analysis EV= \$585,000.00 \$765,000.00 Strong Growth 0.55 \$365,000.00 Weak Growth Move 0.45 EV= \$660,500.00 \$863,000.00 Strong Growth Expand
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MG375 Week 2 Homework - Example 4.2 - Decision trees Value...

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