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

Compute spss and confidence interval , A researcher is interested in charac...

A researcher is interested in characteristics of HIV+ and HIV- adolescents interviewed 166 young adults about their experiences during adolescence. He wished to know, among other

Find the distribution function, The probability density function (pdf) of X...

The probability density function (pdf) of X is given by f(x) =   (1-x/2  if          0 ≤ x           (0                    otherwise a. Verify that that f(x) is a legitim

Simple data analysis&comparison, Progect Guid: PROJECT 1: SIMPLE DATA ANA...

Progect Guid: PROJECT 1: SIMPLE DATA ANALYSIS & COMPARISON REPORT GUIDELINES This document contains general guidelines for the preparation of the Project Report I. Please note,

Acc, Project I The trial balance of the Parton Wholesale Company contain...

Project I The trial balance of the Parton Wholesale Company contained the following accounts at December 31, 2010 the end of the company’s calendar year. PARTON WHOLESALE COMPA

Cost management, if sales is 6800 and variable costs are 2856 what is the v...

if sales is 6800 and variable costs are 2856 what is the variable cost percentage?

Financial instruments, how are financial instruments recognised in financia...

how are financial instruments recognised in financial reports in the past and present?

Biomechanics , what are the biomechanical techniques for swimming freestyle...

what are the biomechanical techniques for swimming freestyle?

How to calculate mode?, Mode Mode, M is the value that has the largest ...

Mode Mode, M is the value that has the largest number of occurrence or frequency in a data set, for instance, given the following data:  11 15 16 12 15 19 17 15 we can se

Marginal and absorption costing, the guinegog is a trader in portable cd-ma...

the guinegog is a trader in portable cd-man. His budgeted output is 5000 units per quarter. The following data was available for the year 1998: Direct labour @ $6 Direct material @

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