Dianna Young is evaluating a plan to expand the product ion facilities of International Compressors Company which manufactures natural gas compressors.Dianna feels that the price of coal is a significant factor in her decision.Below are her estimates of payoffs from various expansion plans under different prices of coal.If Diana knows the price of coal in the future will be the same as it is today, what expansion plan should she select?
A)No expansion
B)Small expansion
C)Medium expansion
D)Cannot determine from information
E)Large expansion

Question

Dianna Young is evaluating a plan to expand the product ion facilities of International Compressors Company which manufactures natural gas compressors.Dianna feels that the price of coal is a significant factor in her decision.Below are her estimates of payoffs from various expansion plans under different prices of coal.If Diana knows the price of coal in the future will be the same as it is today, what expansion plan should she select? 
A)No expansion 
B)Small expansion 
C)Medium expansion 
D)Cannot determine from information 
E)Large expansion

Quizplus · Accepted Answer

Based on the table, if the price of coal stays the same, the best option for maximum payoff would be the medium expansion, which has a potential payoff of $15 million. The small expansion only has a potential payoff of $11 million and the large expansion has a potential payoff of $10 million, so they are not the best options. Therefore, the best choice is C - medium expansion.

Dianna Young Is Evaluating a Plan to Expand the Product