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Problem: Expected Values (Payoff Tables) - The Elwood Company
The Elwood Company is considering hiring several new employees to handle an overload from a newcontract. If the new people are not hired, there will be delays in contract work. The following payoff matrix has been prepared for analyzing whether new people are needed:
Hire New Do Not Hire
People New People
Retain new customers $100,000 $75,000Lose new customers 25,000 50,000
Based on past experience, the company expects to retain 75% of the new customers with no new hires.
Required -
Calculate the expected profit for the "no hire" decision.
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