Answer to Question #116913 in Other for safiyah

Question #116913
A company has the options of building a full size plant or a small plant that can be
expanded later. A market survey indicates that the probabilities of having a high
and low demand over the next 10 years are 0.75 and 0.25 respectively. The
immediate construction of a large plant will cost Rs. 5 million and a small plant will
cost only Rs1 million. The expansion of the small plant 2 years from now is
estimated to cost Rs4.2 million. Estimates of annual income for each of the
alternatives are given as follows:
- Full size plant and high demand will yield Rs. 1,000,000 annually.
- Full size plant and low demand will yield Rs. 300,000 annually.
- Small plant and low demand will yield Rs. 200,000 annually.
- Small plant and high demand will yield Rs. 250,000 annually.
- Expanded small plant with high demand will yield Rs. 900,000 annually.
- Expanded small plant with low demand will yield Rs. 200,000 annually.
(Note: Small plant with low demand after 2 years will not be expanded)
1
Expert's answer
2020-05-18T09:13:38-0400
Dear safiyah, your question requires a lot of work, which neither of our experts is ready to perform for free. We advise you to convert it to a fully qualified order and we will try to help you. Please click the link below to proceed: Submit order

Need a fast expert's response?

Submit order

and get a quick answer at the best price

for any assignment or question with DETAILED EXPLANATIONS!

Comments

No comments. Be the first!

Leave a comment

Ask Your question

LATEST TUTORIALS
New on Blog
APPROVED BY CLIENTS