A Company Is Considering Expansion of Its Current Facility to Meet

question 64

Essay

A company is considering expansion of its current facility to meet increasing demand.A major expansion would cost $500,000, while a minor expansion would cost $200,000.If demand is high in the future, the major expansion would result in an additional profit of $800,000, but if demand is low, then there would be a loss of $500,000.If demand is high, the minor expansion will result in an increase in profits of $200,000, but if demand is low, then there is a loss of $100,000.The company has the option of not expanding.For what probability of a high demand will the company be indifferent between the two expansion alternatives?

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Definitions:

Expatriate Assignment

A work assignment which involves an employee relocating to a different country for a designated period to perform job duties.

Temporary Leave

A period of time that an employee is allowed to be away from their job for specific reasons, such as health issues, family commitments, or education, often with the intention of returning to the job.

Succession Planning

The process of identifying and tracking high-potential employees who will be able to fill top management positions when they become vacant.

High-Potential Employees

High-potential employees are individuals within an organization who have been identified as having the capability, aspiration, and commitment to hold successive leadership positions and make significant contributions to organizational success.