Competing product will abc be indifferent among alternatives

Reference no: EM1316206

Probability using expected values.

The ABC Co. is considering a new consumer product. They believe that the XYZ Co. may come out with a competing product. If ABC adds an assembly line for the product and XYZ does not follow with a competitive product, their expected profit is $40,000; if they add an assembly line and XYZ does follow, they still expected a $10,000 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. For what value of probability that XYZ will offer a competing product will ABC be indifferent between the alternatives?

Reference no: EM1316206

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