Need help with 1&2. I have provided an Example of what the decision tree is...
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Need help with 1&2. I have provided an Example of what the decision tree is supposed to resemble. And if you could take me through the steps of question 2 because calculating NPV with all of this information is confusing.
This does not need more info as everything is provided.
The Sourcing Decision at Riverside Crafts independent company, manufacture boats for Riverside at a cost of $1,000 for each boat (excluding raw materials cost). Raw materials cost $4,000 per boat, and Riverside sells each boat for $7,500. Uncertainties Faced by Riverside Crafts Study Questions 1. Draw a decision tree to determine whether Riverside should add capacity to its Mobile plant or if it should outsource to EZ Boats. 2. What is the NPV of expected profit over the next two periods for each of the two choices? Assume a discount factor of k=0.1 per period. 3. What are some other factors that we have not discussed that would affect this decision
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