Use the Information for the Question(s)below

question 57

Essay

Use the information for the question(s)below.
You own a small manufacturing plant that currently generates revenues of $2 million per year.Next year,based upon a decision on a long-term government contract,your revenues will either increase by 20% or decrease by 25%,with equal probability,and stay at that level as long as you operate the plant.Other costs run $1.6 million per year.You can sell the plant at any time to a large conglomerate for $5 million and your cost of capital is 10%.
-Assuming you are able to sell the plant,draw a decision tree detailing this problem.

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Definitions:

Volume

The size of the space covered by an object or a substance.

Density

A physical property that denotes the mass of a substance per unit volume.

Volume

The space occupied by an object or substance, or encased within a holding device.

Mass

Mass is a measure of the amount of matter in an object, usually in kilograms or grams.