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

Regression analysis, Data was gathered on a group of ninth grade students. ...

Data was gathered on a group of ninth grade students. Some students have been diagnosed with a learning disability.  All students were measured on conduct, attention, hyperactivity

Jovian moons more geologically active than rocky planet, Why are Jovian moo...

Why are Jovian moons more geologically active than small rocky planets? - Ices deform and melt at much lower temperatures than rock, allowing icy volcanism and tectonics at sur

Completely randomized design, Ask question #MinimumAgency revenues. An econ...

Ask question #MinimumAgency revenues. An economic consultant was retained by a large employment agency in a metropolitan area to develop a regression model for predicting monthly a

Study guide, I have a midterm coming up the teacher is allowing us to have ...

I have a midterm coming up the teacher is allowing us to have a front & back cheats on anything we want on it. Is there a way you guys can make me one?

Regression, y=c+1075x, when x was 2, and y was 239, given that y intercept ...

y=c+1075x, when x was 2, and y was 239, given that y intercept was 11. Calculate the residual

Replacement theory, who is the mathematician who invented replacement theor...

who is the mathematician who invented replacement theory of operation research

Conditional probability, The U.S. Department of Transportation reported tha...

The U.S. Department of Transportation reported that during November, 83.4% of Southwest Airlines’ flights, 75.1% of US Airways’ flights, and 70.1% of JetBlue’s flights arrived on t

How would you go about choosing a random sample, Q. Suppose a study is bein...

Q. Suppose a study is being done and the population is the American public. How would you go about choosing a random sample population to phone for a survey? Solution: One w

Simple arithamatic mean, following the hight of studen 155,153,168,160,162...

following the hight of studen 155,153,168,160,162,166,167,180,257,165,

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