Decide whether to expand the capacity of the plant

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Reference no: EM13781983

A plant manager needs to decide whether to expand the capacity of the plant. There are two states of nature: favourable and unfavourable. In favourable market conditions the plant would make an additional $50,000 when expanded. In unfavourable market conditions the plant would lose an additional $20,000 when expanded. Of course, the manager can choose not to expand and make $0 additional profit in favourable market conditions and lose $0 additional profit in unfavorable market conditions. If the two states of nature are equally likely to occur, what is the Expected Value with Perfect Information (EVwPI) in this case?

Reference no: EM13781983

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