1. Your company has a customer who is shutting down a production line, and it is your responsibility to dispose of the extrusion machine. The company could keep it in inventory for a possible future product and estimates that the reservation value is $100,000. Your dealings on the secondhand market lead you to believe that if you commit to a price of $200,000, there is a 0.5 chance you will be able to sell the machine. If you commit to a price of $300,000, there is a 0.2 chance you will be able to sell the machine. If you commit to a price of $400,000, there is a 0.15 chance you will be able to sell the machine. These probabilities are summarized in the following table. For each posted price, enter the expected value of attempting to sell the machine at that price. (Hint: Be sure to take into account the value of the machine to your company in the event that you are not be able to sell the machine.) Posted Price Probability of Sale Expected Value ($) (5) $400,000 0.15 $300,000 0.2 $200,000 0.5 a. b. C. Assume you must commit to one posted price. 2. In order to maximize the expected profit of the potential sale, which posted price would you commit to in order to maximize the

Darren Mack owns the Gas n’ Go convenience store and gas station. After hearing a marketing lecture, he realizes that it might be possible to draw more customers to his high-margin convenience store by selling his gas at a lower price. However, the Gas n’ Go is unable to qualify for volume discounts on its gas purchases, and therefore, cannot sell gas for profit if the price is lowered. Each new pump will cost $95,000 to install but will increase customer traffic in the store by 12,000 customers per year. Also, because the Gas n’ Go would be selling its gasoline at no profit, Darren plans on increasing the profit margin on convenience store items incrementally over the next 5 years. Assume a discount rate of 7%. The projected convenience store sales per customer and the projected profit margin for the next 5 years are as follows:   Year Projected Convenience Store Sales Per Customer Projected Profit Margin 1 $5.00 20% 2 $6.50 25% 3 $8.00 30% 4…

The Lamar Company manufactures wiring tools. The company is currently producing well below its full capacity. The Boston Company has approached Lamar with an offer to buy 15,000 tools at $1.80 each. Lamar sells its tools wholesale for $1.90 each; the average cost per unit is $1.88, of which $0.32 is fixed costs. If Lamar were to accept Boston's offer, what would be the increase in Lamar's operating profits? Multiple Choice O O $1,500. $5,100. $1,200. $3,600.

Darren Mack owns the​ "Gas n'​ Go" convenience store and gas station. After hearing a marketing​ lecture, he realizes that it might be possible to draw more customers to his​ high-margin convenience store by selling his gasoline at a lower price.​ However, the​ "Gas n'​ Go' is unable to qualify for volume discounts on its gasoline​ purchases, and therefore cannot sell gasoline for profit if the price is lowered.   Each new pump will cost ​$130,000 to​ install, but will increase customer traffic in the store by 13,000 customers per year.​ Also, because the​ "Gas n'​ Go" would be selling its gasoline at no​ profit, Darren plans on increasing the profit margin on convenience store items incrementally over the next five years. Assume a discount rate of 8 percent. The projected convenience store sales per customer and the projected profit margin for the next five years are given in the table below.   Year Projected Convenience Store Sales Per Customer Projected Profit Margin 1…