Decision making question based on finance

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Reference no: EM1362397

My company is located in MO and I am considering opening a branch office in Ohio. Under normal economic conditions, which have a 45% chance of occurring, My company can expect to earn a new income in that branch office of $50,000. If there is a mini recession, which has a 25% chance of occurring, My company will earn $20,000 in that branch office. In a severe recession, which has a 20% chance of occurring, My company will lose $10,000 in the branch office. There is also a slight chance (10%) that the branch office will be a failure and my company will lose $300,000. Should I open the new branch office? Why?

Reference no: EM1362397

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