Myers Business Systems is evaluating the introduction of a new product. The possible levels of unit sales and the probabilities of their occurrence are given next: Possible Market Reaction Low response Moderate response High response Very high response Expected value Sales in Units 20 35 45 60 a. What is the expected value of unit sales for the new product? (Do not round intermediate calculations and round your answer to the nearest whole unit.) Standard deviation Probabilities 0.30 0.20 0.20 0.30 units b. What is the standard deviation of unit sales? (Do not round intermediate calculations. Round your answer to 2 decimal places.) units

Myers Business Systems is evaluating the introduction of a new product. The possible levels of unit sales and the probabilities of their occurrence are given next: Possible Market Reaction Low response Moderate response High response Very high response Expected value Sales in Units 20 35 45 60 a. What is the expected value of unit sales for the new product? (Do not round intermediate calculations and round your answer to the nearest whole unit.) Standard deviation Probabilities 0.30 0.20 0.20 0.30 units b. What is the standard deviation of unit sales? (Do not round intermediate calculations. Round your answer to 2 decimal places.) units

Essentials of Business Analytics (MindTap Course List)

2nd Edition

ISBN:9781305627734

Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Publisher:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Chapter15: Decision Analysis

Section: Chapter Questions

Problem 13P: The following profit payoff table was presented in Problem 1: The probabilities for the states of...

See similar textbooks

Similar questions

Choose the letter/s of the correct answer/s. In Plant Design, one is required to compute for one time-independent and one time-dependent market indicator.Which of the following pairs will provide a better market analysis?A. Payback Period & Breakeven PointB. Capitalized Cost & Payback PeriodC. Discounted Payback Period & Annual WorthD. Inflation Rate & ROI
Which of these two companies is best for investment? Trend Probability Rate of Retrun (Company A) Rate of Retrun (Company B) Bullish Trend 0.3 50% 25% Normal Trend 0.4 20% 15% Beaerish Trend 0.3 -10% 15%
Problem 7-23 (Algo) Comprehensive Problem [LO7-1, LO7-2, LO7-3, L07-5, LO7-6] Lou Barlow, a divisional manager for Sage Company, has an opportunity to manufacture and sell one of two new products for a five- year period. His annual pay raises are determined by his division's return on investment (ROI), which has exceeded 22% each of the last three years. He has computed the cost and revenue estimates for each product as follows: Initial investment: Cost of equipment (zero salvage value) Annual revenues and costs: Sales revenues Variable expenses Depreciation expense Fixed out-of-pocket operating costs The company's discount rate is 20%. Click here to view Exhibit 7B-1 and Exhibit 7B 2, to determine the appropriate discount factor using tables. Required: 1. Calculate the payback period for each product. 2. Calculate the net present value for each product. 3. Calculate the internal rate of return for each product. 4. Calculate the project profitability index for each product. 5.…
You are given the following data about Asset A and Asset B. Asset A Asset B Expected returns 8.6% 7.9% Standard Deviation 3.8% 4.6% Assuming that an investor is to choose between Asset A or Asset B, explain which asset a rational investor will choose. c) With the use of a diagram, explain why an investor will always choose a point on the SML line.
Home Innovations is evaluating a new product design. The estimated receipts and disbursements associated with the new product are shown below. MARR is 10%/yr. Solve, a. What is the external rate of return of this investment? b. What is the decision rule for judging the attractiveness of investments based on external rate of return? c. Should Home Innovations pursue this new product?
Suppose that sending an analyst to an executive education program will raise the precision of the analyst’s forecasts as measured by R-square by .01. How might you put a dollar value on this improvement? Provide a numerical example.
Industry is evaluating two different manufacturing systems (Alpha and Beta): Possible Outcome Probability Rate of Return Alpha System Rate of Return Beta System Optimistic .35 .40 .15 Most likely .45 .25 .30 Pessimistic .20 (.10) (.20) Which manufacturing system provides the lowest expected return? why? Alpha System Beta System Not enough information
4. Middleton Classics would like to test the sensitivity of the estimates used for the input data to compute the net present value and internal rate of return on this investment. Ignore the payback period and the accounting rate of return. Consider a, b, and c below independently by holding everything else constant: a. What is the minimum cost of the investment (to the nearest $100) needed for the owner to accept it? b. Reset cost to $500,000. What is the minimum salvage value (to the nearest $100) needed for the owner to accept it? c.Reset salvage value to $25,000. What is the minimum annual cash flow (to the nearest $100) needed for the owner to accept it? How sensitive to changes in the input data is the decision to accept or reject this investment? Do you have to change the estimates a lot or just a little to make the investment acceptable? Comment on the results of each of these analyses.
refer to below table ,Conduct a sensitivity analysis to determine the sensitivity of NPV to changes in the sales price, number of units sold, the variable costs per unit, fixed costs and the cost of capital. Set these variables’ values at 10% above and 10% below their base-case values. 2. Include a graph in your analysis with below table? 10% above Year Net Cash Flow (RM) Discount Rate (13.20%) Present Value (RM) 0 -1,217,800.00 1 -1217800 1 328,750.00 0.883392 290415.19 2 337,330.00 0.780382 263246.2 3 346,423.15 0.689383 238818.31 4 355,195.10 0.608996 216312.32 5 614,461.20 0.537982 330569.16 NPV 121561.19 10% below Year Net Cash Flow (RM) Discount Rate (10.80%) Present Value (RM) 0 -1,145,800.00 1 -1145800 1 184,000.00 0.902527 166064.98 2 185,395.00 0.814555 151014.45 3 189,459.85 0.735158 139282.93 4 193,936.89 0.6635 128677.14 5 448,143.25 0.598827 268360.17…
Given the following information, calculate the expected value for Firm C's EPS. Data for Firms A and B are as follows: E(EPSA) = $5.10, and σA = $3.63; E(EPSB) = $4.20, and σB = $2.94. Do not round intermediate calculations. Round your answer to the nearest cent. Probability 0.1 0.2 0.4 0.2 0.1 Firm A: EPSA ($1.61) $1.80 $5.10 $8.40 $11.81 Firm B: EPSB (1.20) 1.30 4.20 7.10 9.60 Firm C: EPSC (2.59) 1.35 5.10 8.85 12.79 E(EPSC): $ You are given that σc = $4.12. Discuss the relative riskiness of the three firms' earnings using their respective coefficients of variation. Do not round intermediate calculations. Round your answers to two decimal places. CV A B C The most risky firm is .
Rank the following goods, according to how much their present price responds to expected future prices. (1-most responsive; 4=least responsive). Hint: You should think about the relative costs of storing the good, and the ease of buying and selling it (liquidity) because both help to determine the feasibility of adjusting the timing of purchases and sales. < Iron. Stocks. Apples. Gold.
You have collected the following NH-NL indicator data: . If you are an technician following a momentum-based strategy, are you buying or selling today? A momentum-based trader would be selling because the NH-NL indicator indicates that new lows are now outpacing new lows, with a continuing strong upward trend. (Select from the drop-down menus.) Data table (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Day NH-NL Indicator 1 (yesterday) 104 2 99 3 61 10 4567806 42 -18 -43 -80 -84 9 -91 -69 - ☑