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Business, 25.06.2019 10:20 panpanriser76

Amanager is trying to decide whether to build a small, medium, or large facility. demand can be low, average, or high, with the estimated probabilities being 0.40, 0.35, and 0.25, respectively. a small facility is expected to earn an after-tax net present value of just $ 14 comma 000 if demand is low. if demand is average, the small facility is expected to earn $ 15 comma 000; it can be increased to medium size to earn a net present value of $ 30 comma 000. if demand is high, the small facility is expected to earn $ 25 comma 000 and can be expanded to medium size to earn $ 40 comma 000 or to large size to earn $ 125 comma 000. a medium-sized facility is expected to lose an estimated $ 25 comma 000 if demand is low and earn $ 90 comma 000 if demand is average. if demand is high, the medium-sized facility is expected to earn a net present value of $ 100 comma 000; it can be expanded to a large size for a net payoff of $ 105 comma 000. if a large facility is built and demand is high, earnings are expected to be $ 150 comma 000. if demand is average for the large facility, the present value is expected to be $ 80 comma 000; if demand is low, the facility is expected to lose $ 50 comma 000.

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