A Family Business Is Considering Making an Investment in Its

question 23

Multiple Choice

A family business is considering making an investment in its manufacturing operation.Three decisions are under consideration: (1) a large investment; (2) a medium investment;and (3) a small investment.The business believes that there are three possible future outcomes for its product: (1) increasing demand; (2) stable demand;and (3) decreasing demand.The business believes that the probability for increasing,stable and decreasing product demand are 0.4,0.5,and 0.1,respectively.The following payoff table describes the decision situation.

The expected value for the large investment decision is

• A)$700,000
• B)$540,000
• C)$330,000
• D)$165,000

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Definitions:

Sales Message

A key communication or statement designed to persuade potential buyers of the value and benefits of a product or service.

Strategies

Plans of action or policies designed to achieve a major or overall aim.

Ethical Aspects

Considerations concerning moral principles or issues of right and wrong behavior in a given context.

Legal Aspects

Components concerning laws, regulations, and legal interpretation relevant to a particular situation or subject matter.