Hcfp test the drainage system, Basic Statistics

After successfully having navigated the LPP issue, HCFP has once again for your help.  Now, they are considering implementing a new drainage system to improve water flow across the various ponds within their property.  They have found that poor drainage yields significant bacteria build-up that negatively affects both the ecosystems within and human visitors to their preserves.  You have found the following:

  • The new drainage system has an 80% chance of working well and a 20% chance of not working well
  • A new drainage system that works well will yield $150,000 in benefit to HCFP
  • A new drainage system that does not work well will yield only $40,000 in benefit to HCFP
  • Not installing the new system (that is, keeping the status quo) provides $100,000 in benefit to HCFP
  • A test of the drainage system costs $15,000; this test will tell them with absolute certainty whether the system will work well.

Assume all costs and benefits above are expressed in present values.

 

a. If HCFP's goal is to maximize the expected net benefit, should they test the system?  Be sure to draw the decision tree that supports your answer.

b. Assume for this part only that installing a drainage system that does not work well has a benefit of $0, instead of $40,000.Should HCFP test the drainage system?  What is the most that HCFP should be willing to pay for the test?

Posted Date: 2/16/2013 7:54:28 AM | Location : United States







Related Discussions:- Hcfp test the drainage system, Assignment Help, Ask Question on Hcfp test the drainage system, Get Answer, Expert's Help, Hcfp test the drainage system Discussions

Write discussion on Hcfp test the drainage system
Your posts are moderated
Related Questions
To study what fraction of houses for sale in Victoria has a finished basement, a researcher selected a random sample of 20 houses that were on the market. It was found that 11 of t


Consider the following pre-merger information concerning two firms, Mokhaba Manufacturers and Mabhida Merchants:  Data

Ten students are given coaching for environmental statistics. The score obtained in tests 1 and 5 are given below: Sl No of student 1 2 3 4 5 6 7 8 9 10 Marks in 1st test 50 52 53

Capital budgeting Techniques Financial commitment spending budget (or investment appraisal) is the planning process used to figure out whether a company long run purchases such

what''s the asset?

difference b/w historigrams & histogram?

Can you all help with midterms and final exams? meaning getting the assignment done within a couple hours?

what are the aims of education

find a distribution with 10 values between 0 and 10 that has as large a variance as possible