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Calculate the expected values for the decisions

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Question: A fast food restaurant is considering a capacity expansion program. The major factor influencing the success is the future level of interest rate in 6 months. Calculate the expected values for three decisions (strategies). Which strategy would you choose?

The strategies they are considering and expected payoffs are:

                                  Rate goes-up             Rate stays same               Rate goes-down
                                      (50%)                         (40%)                              (10%)

Build 50 new places          150,000                        $50,000                         $150,000

Build 25 new places          110,000                        $25,000                         $80,000

Do nothing                       70,000                            0                               $5,000

Reference no: EM131756797

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