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Topic History of : EMV Question

Max. showing the last 6 posts - (Last post first)
7 years 8 months ago #7861

Mai Saleh

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This is from ur simulator
7 years 8 months ago #7783

Cornelius Fichtner

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Mai,

Please tell us who the original author of this question is and where you have found it. We require the original source to be included with all questions. Thanks!
7 years 8 months ago #7781

Mai Saleh

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You are managing a site excavation project with an aggressive schedule. if you deliver one month ahead schedule
your company will receive a $300,000 bonus. if you deliver your project on schedule, the bonus will be $200,000
there is a $50,000 penalty for every week that you deliver late

you are no trying to determine if you should repair the old excavator at the cost of $20,000 or purchase a new excavator
at the cost of $150,000

using the following information

- There is 80% chance that you will able to secure your $300,000 bonus with the new excavator. Failure will result in a $50,000 penalty
- Repairing the old excavator will cost you $20,000 and will take two weeks
- There is a 60% chance that you will be able to complete your project on schedule with the repaired excavator and secure $200,000 bonus. Failure will most likely result in a $100,000 penalty

What is the best decision


my question is Answer should be

old excavator EMV = (80% * 300,000 - 20% * 50,000)

new excavator EMV = (60% * 200,000 - 40% * 100,000)


why answer is including -150,000 in first EVM and - 20,000 in Second EMV

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