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Kenneth Brown is the principal owner of Brown Oil , Inc . After quitting his university teaching job , Ken has been able to increase his annual salary by a factor of over 100 . At the present time , Ken is forced to consider purchasing some more equipment for Brown Oil because of competition . His alternatives are shown in the following table :
For example , if Ken purchases a Sub 100 and if there is a favorable market , he will realize a profit of $ 300,000 . On the other hand , if the market is unfavorable , Ken will suffer a loss of $ 200,000 . But Ken has always been a very optimistic decision maker .
Although Ken Brown is the principal owner of Brown Oil , his brother Bob is credited with making the company a financial success . Bob is vice president of finance . Bob attributes his success to his pessimistic attitude about business and the oil industry .
1 . If Bob would want to base his decision on the Maximin criterion , then which equipment would he choose ?
2 . Based on the above information , the Expected Monetary Value ( EMV ) of Sub 100 is ____ . ( Please round to a whole dollar .)
3 . Based on the above information , the Expected Monetary Value ( EMV ) of Oiler J is ____ . ( Please round to a whole dollar .)
4 . If Ken would want to maximize the Expected Monetary Value ( EMV ), then he should choose __________.
5 . If Ken believes that Sub 100 cannot get $ 300,000 even in a favorable market , then this figure needs to be at least ___ for Ken to change his decision . ( Please round to a whole dollar .) You