EXPECTED MONETARY VALUE

ALTERNATIVE HIGH DEMAND LOW DEMAND

BUILD LARGE PLANT Rp100,000,000 Rp50,000,000 -Rp60,000,000BUILD SMALL PLANT Rp40,000,000 Rp20,000,000 -Rp4,000,000NO PLANT Rp0 Rp0 Rp0PROBABILITIES 0.3 0.4 0.3

The EMV is Rp 32,000,000. = (Rp 100,000,000 x 0.3)+(Rp 50,000,000 x 0.4)+((-Rp 60,000,000) x 0.3)

MODERATE DEMAND

Rp32,000,000Rp18,800,000

Rp0

The EMV is Rp 32,000,000. = (Rp 100,000,000 x 0.3)+(Rp 50,000,000 x 0.4)+((-Rp 60,000,000) x 0.3)

MAXIMUM FOR ALTERNATIVE