Reference no: EM132396860

Filter manufacturer AquaBlue has recently been affected by a tough competition. The company is contemplating FOUR alternatives: Do Nothing, Promote Sales, Improve Products, and Diversify Product Portfolio. The riskier the project, the greater the impact of the economy on the project's payoff. The least risky investment is just to Promote Sales of existing products, with payoffs of $43 under expanding economy and -$13 (loss) under contracting economy. Second by risk, Improve current Products can generate a payoff of $78 under expanding economy and -$26 (loss) under contracting economy. The last alternative and the riskiest of the 3, Diversify Product Portfolio, can produce a payoff of $102 if the economy expands and -$243 if the economy contracts. There is a 30% chance of that the economy will expand. Assume risk-neutral policy.