Decision Tree 2023 Business Finance

2023 A manager must decide how many machines of a certain type to buy The machines will be used

**A manager must decide how many machines of a certain type to buy. The machines will be used to manufacture a new gear for which there is increased demand. The manager has narrowed the decision of two alternatives: buy one machine or buy two. If only one machine is purchased and demand is more than it can handle, a second machine can be purchased later. However, the cost per machine would be lower if the two machines were purchased at the same time. **

**The estimated probability of low demand is 0.30 and the estimated probability of high demand is 0.70.**

**The net present value associated with the purchase of two machines initially is $75000 if demand is low and $130000 if demand is high.**

**The net present value for one machine and low demand is $90000. If demand is high, ** **there are three options. One option is to do nothing, which would have a net present value of $90000. A second option is to subcontract; that would have a net present value of $110000. The third option is to purchase a second machine. This option would have a net present value of $100000.**

**How many machines should the manager purchase initially? Use a decision tree to analyze this problem**.

*We give our students 100% satisfaction for their assignment, which is one of the most important reasons students prefer us from other helpers. Our professional group and planners have more than ten years of rich experience. The only reason that our inception days, we have helped more than 100000 students with their assignments successfully. Our expert’s group have more than 2200 professionals of different topics, and that not all; we get more than 300 jobs every day more than 90% of the assignment get the conversion for payment.*

**Place Order Now**

**Place Order Now**