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:

Compounded Annually

Interest on a loan or mortgage calculated on an annual basis, where interest from previous periods also earns interest in subsequent periods.

Financial Emergency

A situation where an individual or organization experiences a sudden and severe lack of funds, necessitating immediate action.

Annual Rate Of Growth

The percentage increase in the size or value of something over a one-year period.

Rate Of Growth

The speed at which a variable, such as an economy, company's sales, or an investment, increases over a certain period of time.