Use the Information for the Question(s)below

question 25

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%.
-Assume that you are not able to sell the plant,but you are able to shut down the plant,at no cost,at any time.Draw a decision tree detailing this problem.

---

Definitions:

Psychological Research

The scientific study of behavior, cognitive processes, and emotions, employing various methods to understand mental functions and social dynamics.

Commonsense Understanding

The natural ability to make practical judgments and decisions based on the simple perception of the situation or facts.

Clinical Psychologist

A professional specializing in diagnosing and treating mental illness, emotional disturbances, and dysfunctional behavior through therapy.

Tense And Anxious

Feeling a state of nervousness or worry, often characterized by physical symptoms like increased heart rate and sweating.