A pizza restaurant is deciding among three options: Option 1: to open a second restaurant at a cost of $75,000. Doing so will have an 80% change of success which will earn $122,000. Failure will result in earnings of $30,000. Option 2: to add a takeaway and delivery service to their existing restaurant at a cost of $16,000. Doing so will have a 50% change of success which will earn $80,000. Failure will result in a loss of $10,000. Do nothing Sketch a decision tree and determine which option the Pizza restaurant should choose.
A pizza restaurant is deciding among three options: Option 1: to open a second restaurant at a cost of $75,000. Doing so will have an 80% change of success which will earn $122,000. Failure will result in earnings of $30,000. Option 2: to add a takeaway and delivery service to their existing restaurant at a cost of $16,000. Doing so will have a 50% change of success which will earn $80,000. Failure will result in a loss of $10,000. Do nothing Sketch a decision tree and determine which option the Pizza restaurant should choose.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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- A pizza restaurant is deciding among three options:
- Option 1: to open a second restaurant at a cost of $75,000.
Doing so will have an 80% change of success which will earn $122,000.
Failure will result in earnings of $30,000.
- Option 2: to add a takeaway and delivery service to their existing restaurant at a cost of $16,000.
Doing so will have a 50% change of success which will earn $80,000.
Failure will result in a loss of $10,000.
- Do nothing
Sketch a decision tree and determine which option the Pizza restaurant should choose.
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