Whereas the advanced model is faster but costs more

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Edwards Machine Tools needs to purchase a new machine. The basic model is slower but costs less, whereas the advanced model is faster but costs more. Profitability will depend on future demand.

The following table presents an estimate of profits over the next three years.

Decision                     low                   medium                       high

Basic model              $80,000           $100,000                  $150,000

Advanced model       $40,000             $110,000                 $220,000

Given the uncertainty associated with the demand volume, and no other information to work with, how would you make a decision? Explain your reasoning. (please explain in detail, thank you so much)

Reference no: EM131686725

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