{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

MG375 Week 2 Homework

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

This preview shows pages 1–3. Sign up to view the full content.

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

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
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 0.55 \$413,000.00 Weak Growth Expand 0.45 \$843,000.00 EV= \$850,000.00 Do Nothing Strong Growth 0.55 Do Nothing \$850,000.00 EV= \$703,750.00 Weak Growth \$525,000.00 0.45 Alternative Revenue Cost Value Move to new location, strong growth \$975,000.00 \$210,000.00 \$765,000.00 Move to new location, weak growth \$575,000.00 \$210,000.00 \$365,000.00 Expand Store, strong growth \$950,000.00 \$87,000.00 \$863,000.00
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern