Determine expected value, King, Corporation, a successful

Determine expected value

Assignment Help Finance Basics

Reference no: EM1351180

King, Inc., a successful Midwest firm, is considering opening a branch office on the west coast. Under normal economic conditions, with a 45% probability of occurring, King can expect to earn a net income of $50,000 per year. In a mini-recession, at 25% probability, King will earn $20,000. In a severe recession, at a 20% probability, King will lose $10,000. There is also a slight probability 10% that King will lose $300,000 if the expansion fails and the branch office must be closed.

Based solely on expected value, should King open a branch office in California?

Reference no: EM1351180

Questions Cloud

Explain debt that was discharged in bankruptcy : Explain debt that was discharged in bankruptcy when Zenith told Sergie that repaying the debt would help him "rebuild his credit" since Zenith

What methods and techniques does the organization use : What recommendations would you make to senior leaders to improve the process, including any techniques to widen the diversity of the talent pool?

Use for the magnitude of the acceleration due to gravity : A 02385 mH inductor has a length that is four times its diameter. If it is wound iwth 10.3 cm^-1 truns per centimeter, what is the length? Answer in units of m.

Auditing issues-kent-cpa and davidson corp : Kent, CPA, is engaged in the audit of Davidson Corp.'s financial statements for the year ended December 31, 20XX. Kent is about to commence auditing Davidson's employee pension expense,

Determine expected value : King, Corporation, a successful Midwest company, is planning opening a branch office on the west coast. Under normal economic conditions, with a 45% probability of occurring, King can expect to earn a net income of $50,000 per year.

Outline the employee orientation program : Earliest employee contacts with the training function is through an orientation program, designed distribute information to new employees quickly and efficiently

What charge must be on each plate : A spherical Christmas tree ornament is7.18 cm in diameter.What is magnification of the image ofan object placed 8.6 cm away from the ornament.

Explain what factors or influences do you think can help : Explain What factors or influences do you think can help change people's worldviews and What could, or has, changed your own worldview

Find the characteristic of managerial accounting : The president of Warren Manufacturing Company is paid an incentive bonus that is equal to 5 percent of net income. During the current accounting period,

User Account

All Pages