Expected value for the build new plant option

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Howard Weiss, Inc., is considering building a sensitive new airport scanning device.His managers believe that there is a probability of 0.35 that the ATR Co. will come out with a competitive product. It Weiss adds an assembly line for the product and ATR Co. does not follow with a competitive product, Weiss's expected profit is $50,000; if Weiss adds an assembly line and ATR follows suit, Weiss still expects $10,000 profit. If Weiss adds a new plant addition and ATR does not produce a competitive product, Weiss expects a profit of $600,000; if ATR does not compete for this market, Weiss expects a loss of $80,000.

a) Expected value for the build new plant option.

Reference no: EM13222117

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