I have a restaurant, but I don't know what demand will be next year. I need to decide whether to expand or not. Regardless of whether I expand or not, there's a 20% chance that I'll have high demand and a 80% chance I'll have low demand. If I expand and I have high demand, I'll get $1M. If I expand and get low demand, I'll make $0. If I don't expand and get high demand, I'll get $200K. If I don't expend and get lo demand, I'll make $100K. What is the expected value of expanding. Answer roudned to the nearest thousand of dollars, so if your asnwer is 434,300, answer 434000. I have a restaurant, but I don't know what demand will be next year. I need to decide whether to expand or not. Regardless of whether I expand or not, there's a 20% chance that I'll have high demand and a 80% chance I'll have low demand. If I expand and I have high demand, I'll get $1M. If I expand and get low demand, I'll make $0. If I don't expand and get high demand, I'll get $200K. If I don't expend and get lo demand, I'll make $100K. What is the expected value of NOT expanding. Answer roudned to the nearest thousand of dollars, so if your asnwer is 434,300, answer 434000.

Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
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  1. I have a restaurant, but I don't know what demand will be next year. I need to decide whether to expand or not. Regardless of whether I expand or not, there's a 20% chance that I'll have high demand and a 80% chance I'll have low demand.
    If I expand and I have high demand, I'll get $1M. If I expand and get low demand, I'll make $0. If I don't expand and get high demand, I'll get $200K. If I don't expend and get lo demand, I'll make $100K. What is the expected value of expanding. Answer roudned to the nearest thousand of dollars, so if your asnwer is 434,300, answer 434000.

  2. I have a restaurant, but I don't know what demand will be next year. I need to decide whether to expand or not. Regardless of whether I expand or not, there's a 20% chance that I'll have high demand and a 80% chance I'll have low demand.
    If I expand and I have high demand, I'll get $1M. If I expand and get low demand, I'll make $0. If I don't expand and get high demand, I'll get $200K. If I don't expend and get lo demand, I'll make $100K. What is the expected value of NOT expanding. Answer roudned to the nearest thousand of dollars, so if your asnwer is 434,300, answer 434000.
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