Howard Weiss Inc is considering building a sensitive new air

Howard Weiss, Inc., is considering building a sensitive new airport scanning device.His managers believe that there is a probability of 0.40 that the ATR Co. will come out with a competitive product. It Weiss adds an assembly line for the product and ATR Co. does not follow with a competitive product, Weiss\'s expected profit is $50,000; if Weiss adds an assembly line and ATR follows suit, Weiss still expects $15,000 profit. If Weiss adds a new plant addition and ATR does not produce a competitive product, Weiss expects a profit of $600,000; if ATR does not compete for this market, Weiss expects a loss of $100,000.

a) expected value for the add assembly line option is $36,000

b) Expected value for the Build New Plant Option is $320,000

What is the value of the return under the decision to build a new plant $

Solution