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

Time series, mathametical examples of components

mathametical examples of components

Standard price, Stock at hand 1000 unit at #0.80 each, received 2000 units ...

Stock at hand 1000 unit at #0.80 each, received 2000 units at #1.10 each,

Compute the mean absolute deviation and mean square error, Toyota Motors in...

Toyota Motors introduced a hybrid car Hybrid G in the U.S. market in 2006. In the first three years, the sales of Hybrid G were strong due to the buzz surrounding the hybrid car co

Cost inventory, how do I find the cost of inventory?

how do I find the cost of inventory?

Individual tax accounting, need help with exercise that asks to calculate g...

need help with exercise that asks to calculate gross income, adjusted gross income and taxable income based on items1-13, which i can submit the exercise copies as soon as you tell

State income tax, State income tax In most declares paycheck accounting...

State income tax In most declares paycheck accounting will involve a condition earnings tax. In those declares a company is necessary to hold the condition earnings tax that an

Cost accounting, wat is cost accounting and wats its scope ?

wat is cost accounting and wats its scope ?

Pie diagram, A survey was conducted among the residents of Pune City, its s...

A survey was conducted among the residents of Pune City, its suburbs and the Pune Cantonment area. The following three pie diagrams show their respective preferences for living in

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