Expected monetary value

Assignment Help Business Management
Reference no: EM131750

Question 1

(a) Explain the term "expected monetary value" when applied to a business project with an uncertain outcome.

(b) Two alternatives business projects. I and II, have the following probability distributions of profits:

(i) Find the expected profit for each project and state which project you would recommend the business to pursue.

(ii) What other factors should a business take into account when deciding between alternative projects?

(c) a producer has developed a new product and now has to decide whether to manufacture and market the new product or simply sell the product design for £5000. If marketed successfully, the product will yield and expected profit of £10,000. If not successful, a profit of just £2000 is expected.

The producer also has the option of conducting a market research survey, which would cost £500. The estimated probabilities associated with the possible outcomes are summarised below:

- Probability of success with no market research = 0.4
- Probability of success following a favourable market research report = 0.8
- Probability of success following an unfavourable market research report = 0.2
- Probability of the market research report being favourable = 0.5

(i) Calculate a decision tree diagram to summarise the decisions that the producer may make.

(ii) Calculate the expected monetary values for the various options and make a recommendation to the producer.

Question 2

A manufacturer of computers claims that his computers are operational for more than 80% of the time. During the course of a year one computer was operational for 270 days.

Test, at the 1% level, whether the manufacturer's claim was justified.

Question 3

The following set of represents the annual expenditure on home insurance by 150 households in 2005.

Expenditure (£) Frequency
Less than 50 20
50 but less than 100 45
100 but less than 150 45

150 but less than 200 35
200 but less than 250 3
250 but less than 300 2

(a) Find the arithmetic mean and the median for this distribution. From your results, would you say that the distribution was positively or negatively skewed?

(b) Calculate the standard deviation.

(c) An insurance trade association claims that average expenditure on home insurance in the country as a whole is £100. You are asked to test the association's claim. State the null and alternative hypotheses, identify the critical region (using a 5% significant level), calculate the test statistic and draw an appropriate conclusion.

Question 4

(a) distinguish between simple random sampling and quota sampling

(b) Discuss one advantages and one disadvantage of quota sampling

(c) Define the standard error of the mean

(d) To investigate the amount spent each year on car repairs by the average households in a country, a random sample of 1000 households is estimated to be £250.

(i) Calculate 90%, 95% and 99% confidence intervals for the population mean

(ii) What sample size would be requiring to estimate the population mean to within £10 with %95 confidence.

Question 5

The following data shows the number of daily deliveries made by a delivery firm over a 30 day period:

19 32 21 28 49 44 38 12 33 51
26 10 38 32 12 45 21 33 24 54
41 31 23 28 35 30 34 53 24 17

(a) Tabulate the data above in the form of a grouped frequency distribution table (using class intervals of: ‘10 to 19'; ‘20 to 29'; ‘30 to 39'; ‘40 to 49' and ‘50 to 59') and, giving your answers correct to 2 decimal places, calculate the:

(i) Mean

(ii) Standard deviation

(b) Using the tabulated grouped frequency distribution data, draw a fully labelled histogram of the number of daily deliveries. Using the histogram:

(i) Comment on the shape of the distribution;

(ii) Determine the most likely value of the mode

Reference no: EM131750

Questions Cloud

Solution to the fundamental economic problem : Explain the effects of the new factory on the items below. Then place the number of each item on the circular-flow diagram to show whether the activity takes place in the product market or resource market
Future generation telecommunication technology : Write a report on Future Generation Telecommunication Technology.
Write pseudo code - program and draw flow chart : Write pseudo code, program and draw flow chart for programs
Auditing and assurance : Show the audit inherent risk and rate the risk as low, medium or high.
Expected monetary value : Explain the term "expected monetary value" when applied to a business project with an uncertain outcome.
Capital budgeting project : Proposing a new venture to the management of your company
Write a program to crypt its input accordingly : Write a program to crypt its input according to a specified transformation scheme
A non-linear circuit problem : Computer program which will calculate the voltage across a resistor in the circuit
Develop a two dimensional interactive game : The player starts as a disk, but can "morph" (that is expand and contract) in selected directions

Reviews

Write a Review

Business Management Questions & Answers

  Caselet on michael porter’s value chain management

The assignment in management is a two part assignment dealing 1.Theory of function of management. 2. Operations and Controlling.

  Mountain man brewing company

Mountain Man Brewing, a family owned business where Chris Prangel, the son of the president joins. Due to increase in the preference for light beer drinkers, Chris Prangel wants to introduce light beer version in Mountain Man. An analysis into the la..

  Mountain man brewing company

Mountain Man Brewing, a family owned business where Chris Prangel, the son of the president joins. An analysis into the launch of Mountain Man Light over the present Mountain Man Lager.

  Analysis of the case using the doing ethics technique

Analysis of the case using the Doing Ethics Technique (DET). Analysis of the ethical issue(s) from the perspective of an ICT professional, using the ACS Code of  Conduct and properly relating clauses from the ACS Code of Conduct to the ethical issue.

  Affiliations and partnerships

Affiliations and partnerships are frequently used to reach a larger local audience? Which options stand to avail for the Hotel manager and what problems do these pose.

  Innovation-friendly regulations

What influence (if any) can organizations exercise to encourage ‘innovation-friendly' regulations?

  Effect of regional and corporate cultural issues

Present your findings as a group powerpoint with an audio file. In addition individually write up your own conclusions as to the effects of regional cultural issues on the corporate organisational culture of this multinational company as it conducts ..

  Structure of business plan

This assignment shows a structure of business plan. The task is to write a business plane about a Diet Shop.

  Identify the purposes of different types of organisations

Identify the purposes of different types of organisations.

  Entrepreneur case study for analysis

Entrepreneur Case Study for Analysis. Analyze Robin Wolaner's suitability to be an entrepreneur

  Forecasting and business analysis

This problem requires you to apply your cross-sectional analysis skills to a real cross-sectional data set with the goal of answering a specific research question.

  Educational instructional leadership

Prepare a major handout on the key principles of instructional leadership

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd