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The ABC Co. is considering a new consumer product. They believe there is a probability of 0.4 that XYZ Co. will come out with a competitive product.

The ABC Co. is considering a new consumer product. They believe there is a probability of 0.4 that XYZ Co. will come out with a competitive product. If ABC adds an assembly line for the product and XYZ does not folow with a competitive product, their expected profit is \$40,000; if they add an assembly line and XYZ does follow, they still expect a \$10,0000 profit. If ABC adds a new plant addition and XYZ does not produce a competitive product, they expect a profit of \$600,000; if XYZ does compete for this market, ABC expects a loss of \$100,000.

a. determine the EMV of each decision
b. determine the EOL of each decision
c. compare results of a and b
d. calcualte the EVPI

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