Prepare a probability distribution table

Reference no: EM1385152

Ariba Ltd produces a range of ground coffee for commercial use within cafés and restaurants. The company is looking to extend its business and is considering bidding for the franchise to operate a coffee bar within a local shopping centre.

Research suggests that over the one-year period of the franchise, income and costs are likely to be:

Sales Revenue (£)	Probability
30,000	0.1
40,000	0.2
60,000	0.4
70,000	0.2
80,000	0.1

Variable Costs £	Probability
12,000	0.2
20,000	0.5
28,000	0.3

The franchise licence cost will be £24,000.

Required

(a) Prepare a probability distribution table and using this table, calculate the probability of:

(1) Not making a loss;

(2) Earning a profit of at least £8,000

(b) Discuss the limitation of the expected value approach to assessing the risks of taking on the franchise. What other factors should be considered by Ariba Ltd?

Reference no: EM1385152

Questions Cloud

Effective recruitment and selection activities : Illustrate what are some ways in which effective recruitment and selection activities can help an organization gain a competitive advantage?

Genetic differences from pre storm population : A hurricane in Caribbean devastates a small isolated island, destroying all but about a dozen of once dominant turpentine trees on the island.

Find out useful power of the conveyor : A model rocket is launched straight upward with the initial speed of 70m/s. It accelerates with a constant upward acceleration of 3 m/s2 until its engines stop at an altitude of 180 m.

Explain how many calendars should be ordered : If S & G reduces the calendar price to $1.6 at the end of June and can sell all surplus calendars at this price, explain how many calendars should be ordered.

Prepare a probability distribution table : Discuss the limitation of the expected value approach to assessing the risks of taking on the franchise. What other factors should be considered by Ariba Ltd?

Hr departments should reveal the various diagnoses : Do you think that HR departments should reveal the various diagnoses and proceedures that occur in a company and leads to the various premiums?

Evaluating team performance and individual performance : Recommend a strategy for the corporation to adopt to assess team performance. Illustrate the differences between evaluating team performance and individual performance.

How many calories does a person metabolize : Transverse waves travel with a speed of 18 m/s in a string under tension of 5 N. What tension is required for a wave speed of 27 m/s in the same string.

Engine suspended from a spreader beam : The 3.5-Mg engine is suspended from a spreader beam having a negligible mass and is hoisted by a crane which exerts a force of 40 kN on the hoisting cable. Determine the distance the engine is hoisted in 2.4 s, starting from rest.

User Account

All Pages