The Local Operations Manager for the IRS Must Decide Whether

question 19

Essay

The local operations manager for the IRS must decide whether to hire one, two, or three temporary workers. He estimates that net revenues will vary with how well taxpayers comply with the new tax code. $$\begin{array} { c c c c } \text { \# of Workers } & \begin{array} { c } \text { Low } \\\text { Compliance }\end{array} & \begin{array} { c } \text { Medium } \\\text { Compliance }\end{array} & \begin{array} { c } \text { High } \\\text { Compliance }\end{array} \\\hline 1 & 50 & 50 & 50 \\2 & 100 & 60 & 20 \\3 & 150 & 70 & - 10 \\\hline\end{array}$$
If he thinks the chances of low, medium, and high compliance are 20%, 30%, and 50%, respectively, what are the expected net revenues for the number of workers he will decide to hire?

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Definitions:

Common Stock Cash Dividend

A payment made to shareholders out of a company's earnings, specifically to common stockholders.

Treasury

Pertains to the management of an organization's revenues, expenditures, and investment strategies, often associated with government or corporate finance.

Authorized

Officially permitted or agreed upon, often referring to the maximum number of shares a corporation is legally allowed to issue.

Outstanding

Refers to shares that are currently owned by investors, including those held by public investors, institutional investors, and company insiders.