What is the payoff for the farmer

Assignment Help Managerial Accounting
Reference no: EM133114783

Question - A farmer must decide whether to take protective action to limit damage to his grapefruit crop in the event that the overnight temperature falls to a level well below freezing. If the temperature drops too low he runs the risk of losing his entire crop, valued at $75,000. Based on the National Weather Service, the probability of such a temperature drop is 60%. He can insulate his crop by spraying water on all the trees, which will cost $20,000. This action might succeed in protecting the crop, with the following possible outcomes:

Probability

Damage

0.30

$0

0.15

$5,000

0.10

$10,000

0.15

$15,000

0.30

$20,000

Required -

1. What is the payoff for the farmer if the farmer did protect the crops?

2. What is the payoff for the farmer if the farmer did n't do anything to protect the crops?

3. What is the difference in payoffs between farmer insulating crops and farmer not insulating crops?

Reference no: EM133114783

Questions Cloud

What is the maximum lease payment acceptable to black oil : Suppose it is estimated that the equipment will have no savage value at the end of the lease. What is the maximum lease payment acceptable to Black Oil
Annualized holding period yield : Your return on amazon share was 40% over the last 18 months. ignoring transaction costs what is the annualized holding period yield (also called equivalent annu
Compute the current price of the five zero-coupon bonds : Suppose that the continuously compounded, annualized yields-to-maturity on 6m, 1y, 18m, 2y, 30m, and 3y zero-coupon bonds are currently 4.2%, 4.7%, 5.0%, 5.6%,
What is the yield to maturity of bond : a) What are the annualized, continuously-compounded rates applicable for loans with maturities t3 = 9m, respectively t6 = 18m?
What is the payoff for the farmer : If the temperature drops too low he runs the risk of losing his entire crop, valued at $75,000. What is the payoff for the farmer
Calculate the fund annual treynor ratio : Calculate the fund's annual Treynor ratio. Calculate the fund's annual Information ratio. Calculate the fund's annual Sharpe ratio.
Explain transformational leadership : Explain transformational leadership as it relates to the role of a nursing manager and discuss three behavioral changes you might adopt as a nursing leader.
Planning and development implementation process : Prepare a report for your manager explaining the planning and development implementation process that you went through to develop your plan
What price will a margin call occur : An investor buys some shares of Walmart at $45 per share on margin with an initial margin of 70 percent. What price will a margin call occur

Reviews

Write a Review

Managerial Accounting Questions & Answers

  Manage budgets and financial plans

Explain the budgeting process and its importance to a business, identifying the components of different budgets, forecast estimates for inclusion in the budgets.

  Prepare a retained earnings statement

Prepare a retained earnings statement for the year and Prepare a stockholders' equity section of given case.

  Prepare a master budget for the three-month period

Prepare a master budget for the three-month period.

  Construct the companys direct labor budget

Construct the company's direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is adjusted each quarter to match the number of hours required to produce the forecasted number of units produced.

  Evaluate the predetermined overhead rate

Evaluate the Predetermined Overhead Rate

  Determine the company''s bid

Determine the company's bid if activity-based costing is used and the bid is based upon full manufacturing cost plus 30 percent.

  Compute the pool rates for the different activities

Complete the schedule to compute the pool rates for the different activities.

  Prepare Company financial statements

Prepare Company financial statements

  Prepare an analysis of terracycles

This individual assignment is based on the TerraCycle Inc.

  Discuss the ethical issues

Discuss the ethical issues

  Political resources in emerging markets

Calculate the GDP in Income Approach  and Expenditure Approach

  Management accounting - ehsan electronics company

A new plant accountant suggested that the company may be able to assign support costs to products more accurately by using an activity based costing system that relies on a separate rate for each manufacturing activity that causes support costs.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd