Construct a payoff table for the president

Reference no: EM131015367

The president of a large oil company must decide how to invest the company's P10 million of excess profits. He could invest the entire sum in solar energy research, or he could use the money to research better ways of processing coal so that it will burn more cleanly. Another possible option is to put half of this R&D money into solar research and half into coal research. Not investing is not an option. The president estimates 1,000 percent return on investment if the solar research is successful and a 500 percent return on investment if the coal research is successful.

a.) Construct a payoff table for the president's R&D investment problem.

b.) Based on the maximin criterion, what decision should the president make?

c.) Based on the maximax criterion, what decision should the president make?

d.) Based on the minimax regret criterion, what decision should the president make?

Reference no: EM131015367

Questions Cloud

Dispose of the equipment in the coming year : Suarez intends to dispose of the equipment in the coming year. It is expected that the cost of disposal will be $ 38,900 . As of December 31, 2014, the equipment has a remaining useful life of 4 years.

What exactly is terrorism : Although many people talk of "terrorism" today, the term is seldom explicitly defined. What exactly is terrorism? Are there ever any times when terrorism is justified

What is the probability of committing a type ii error : A computer manufacturer estimates that its line of mini- computers has, on average, 8.4 days of downtime per year. To test this claim, a researcher contacts seven companies that own one of these computers and is allowed to access company computer ..

Thresholds of environmental processing and documentation : In a brief paper, describe the differences between these three different thresholds of environmental processing and documentation. Additionally, provide at least one example of when it would necessary to utilize a CE, an EA/FONSI, and a DEIS or FE..

Construct a payoff table for the president : Construct a payoff table for the president's R&D investment problem. Based on the maximin criterion, what decision should the president make? Based on the maximax criterion, what decision should the president make Based on the minimax regret criteri..

How could they have been incorporated in the formula : What would you expect would happen to the cost of equity if you had to raise it by selling new equity, and why?

Find a second solution to the differential equation : Using the formula for a second solution, y2 = y1 (x) ∫e-∫p(x)dx / y12 dx, Find a second solution to this differential equation.

Develop a java application based on the jframe : You are required to write a Java Application that uses an interactive Graphical User Interface (GUI) based on the JFrame class using SWING GUI components.

How is the organizational issue reflected in the policies : How are clinical decisions made in the organization? Include the stakeholders. How is the organizational issue reflected in the policies of the organization? Discuss how this issue relates to national patient safety initiatives? Describe any technolo..

User Account

All Pages