Hcfp test the drainage system, Basic Statistics

Assignment Help:

After successfully having navigated the LPP issue, HCFP has once again for your help.  Now, they are considering implementing a new drainage system to improve water flow across the various ponds within their property.  They have found that poor drainage yields significant bacteria build-up that negatively affects both the ecosystems within and human visitors to their preserves.  You have found the following:

  • The new drainage system has an 80% chance of working well and a 20% chance of not working well
  • A new drainage system that works well will yield $150,000 in benefit to HCFP
  • A new drainage system that does not work well will yield only $40,000 in benefit to HCFP
  • Not installing the new system (that is, keeping the status quo) provides $100,000 in benefit to HCFP
  • A test of the drainage system costs $15,000; this test will tell them with absolute certainty whether the system will work well.

Assume all costs and benefits above are expressed in present values.

 

a. If HCFP's goal is to maximize the expected net benefit, should they test the system?  Be sure to draw the decision tree that supports your answer.

b. Assume for this part only that installing a drainage system that does not work well has a benefit of $0, instead of $40,000.Should HCFP test the drainage system?  What is the most that HCFP should be willing to pay for the test?


Related Discussions:- Hcfp test the drainage system

Evaluate the probabilities, Problem: a. According to a Business week po...

Problem: a. According to a Business week poll of 1035 adults, 40% of those surveyed agreed strongly with the proposition that business has too much power over American life (B

Define Allocate , Define Allocate To split a lump-sum appropriation into p...

Define Allocate To split a lump-sum appropriation into parts that are specific for expenses by particular government models and/or for particular requirements, actions, or things.

Quantitative research methods, I have four assignments that are due tomorro...

I have four assignments that are due tomorrow. Can you help?

Joy, Ask questio How many women must be randomly selected to estimate the m...

Ask questio How many women must be randomly selected to estimate the mean weight of women in one age group? We want 90% confidence that the sample mean is within 3.7 lbs of the po

Vital statistics, what are the methods of measuring mortality and fertility...

what are the methods of measuring mortality and fertility rates?

Find out the value to the firm and wacc , 1. HV Inc. is trying to determine...

1. HV Inc. is trying to determine the optimal time to undertake a product expansion. The project will require an initial investment of $15M and the firm has a WACC of 3%. The expan

Z-square, Is the z-square the same as the z-test? what is it used for and h...

Is the z-square the same as the z-test? what is it used for and how is it different from t-square?

Linear regression, Question: Students in a science class have just rece...

Question: Students in a science class have just received their grades on the first test.  The instructor has provided information about the first test grades in some previous c

Revenue Recognition & Depreciation, Question 2 Pankratov Lakes is a new rec...

Question 2 Pankratov Lakes is a new recreational real estate development that consist of 500 Lake front and lake view lots. As a special incentive to the first 100 buyers of lake v

Write Your Message!

Captcha
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