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| Topic: |
Business
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| Number of pages / Number of words: |
3 / 774 |
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A circle is then drawn at each end to indicate the chance. If the firm does not make the product, then there will be no sales; thus the expected monetary value will be zero. However, if the firm wishes to make this new product, there will be either high sales or low sales. If the firm makes the product, the cost of it is $125,000...
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If it earns high sales, the firm will receive $1,670,000, where the probability of this is 0.8; thus the expected monetary value will be $1,545,000. If the firm earns low sales however, then it only receives $25,000, where the probability of this is 0.2; thus the expected monetary value will be -$100,000...
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