Company makes a particular decision in the face of uncertain

Assignment Help Accounting Basics

Reference no: EM131105960

If your company makes a particular decision in the face of uncertainty, you estimate that it will either gain $10,000, gain $1000, or lose $5000, with probabilities 0.40, 0.30, and 0.30, respectively. You (correctly) calculate the EMV as $2800. However, you distrust the use of this EMV for decisionmaking purposes. After all, you reason that you will never receive $2800; you will receive $10,000, $1000, or lose $5000. Discuss this reasoning.

Reference no: EM131105960

Questions Cloud

What are some potential problems and limitations : What are some potential problems and limitations of financial ratio analysis?

Instead of making the risky decision described : In the previous question, suppose you have the option of receiving a check for $2700 instead of making the risky decision described. Would you make the risky decision, where you could lose $5000, or would you take the sure $2700? What would influe..

Cost of catching the fish : Question 1 Refer to the accompanying figure, which shows the market for fish, to answer the questions that follow. If the government sets a quota of 300 pounds of fish caught per day, then fish will sell for __________ more per pound than the cost..

Differences and similarities between u.s. gaap and i gaap : Briefly describe some of the similarities and differences between U.S. GAAP and i GAAP with respect to the accounting for liabilities.

Company makes a particular decision in the face of uncertain : If your company makes a particular decision in the face of uncertainty, you estimate that it will either gain $10,000, gain $1000, or lose $5000, with probabilities 0.40, 0.30, and 0.30, respectively. You (correctly) calculate the EMV as $2800.

Would you recommend renewing the loan or demand repayment : Similarly, if you were the bank loan officer, would you recommend renewing the loan or demand its repayment?Would your actions be influenced if in early 2009 D'Leon showed you its 2009 projections along with proof that it was going to raise more than..

Develop a risk management plan for a company : Task: You are required to develop a risk management plan for a company of your choice, or for an area of the Registered Training Organisation in which you are studying. Your risk management plan must include: a detailed stakeholder analysis

A particular stock goes up each day with probability : Suppose you believe that the price of a particular stock goes up each day with probability p and goes down with probability 1- p. You also believe the daily price changes are independent of one another. However, you are not sure of the value of p.

Evidence admission and suppression : Evidence that is suppressed because it was gathered in violation of the Constitution may have a profound impact on the guilt of a defendant. However, the ability to limit what information a juror has access to is becoming increasingly more difficu..

User Account

All Pages