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Ivahew [28]
2 years ago
7

Jay Seago is suing the manufacturer of his car for $3.5 million because of a defect that he believes caused him to have an accid

ent. The accident kept him out of work for a year. The company has offered him a settlement of $700,000, of which Jay would receive $600,000 after attorneys’ fees. His attorney has advised him that he has a 50% chance of winning his case. If he loses, he will incur attorneys’ fees and court costs of $75,000. If he wins, he is not guaranteed his full requested settlement. His attorney believes that there is a 50% chance he could receive the full settlement, in which case Jay would realize $2 million after his attorney takes her cut, and a 50% chance that the jury will award him a lesser amount of $1 million, of which Jay would get $500,000. Using decision tree analysis, decide whether Jay should proceed with his lawsuit against the manufacturer.
Business
1 answer:
Studentka2010 [4]2 years ago
3 0

Answer:

Since the expected value is higher for not suing ($600,000), then Jay should not sue. The expected value of the best case scenario in case of suing is only $500,000 and in the expected value of the worst case scenario is -$37,500.

Explanation:

he decides to not sue = expected value $600,000

he decides to sue:

50% chance of winning

expected value

  • $2,000,000 x 50% x 50% = $500,000
  • $500,000 x 50% x 50%  = $125,000

50% chance of losing

  • expected value = -$75,000 x 50% = -$37,500

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Amount to be recorded for accounts receivable would be $15000.

<u>Explanation:</u>

Accounts receivable are lawfully enforceable cases for installment held by a business for products provided as well as administrations rendered that clients/customers have requested yet not paid for. These are for the most part as solicitations raised by a business and conveyed to the client for installment inside a concurred time span.

Accounts receivable (AR) is the balance of money due to a firm for goods or services delivered or used but not yet paid for by  the customers till now. So they will go in the accounts to still be receivable.

6 0
2 years ago
The future value of $200 received today and deposited for three years in an account which pays semiannual interest of 8 percent
yanalaym [24]
The formula is
A=P (1+r/k)^kt
A future value?
P present value 200
R interest rate 0.08
K compounded semiannual 2
T time 3years

A=200×(1+0.08÷2)^(2×3)
A=253....answer
7 0
2 years ago
Companies in the U.S. car rental market vary greatly in terms of the size of the fleet, the number of locations, and annual reve
Pachacha [2.7K]

Answer:

The question does not include any requirements, so I looked for similar questions:

  1. Use the least squares method to develop the estimated regression equation.
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1) Y = -14.95 + 12.82X

2) for every 1 thousand cars put into service, revenue should increase by $12.82 million.

See attached PDF for calculations

Download pdf
7 0
2 years ago
At a decision point in a decision tree, which machine would you select when trying to maximize payoff when the anticipated benef
Marat540 [252]

Answer:

Machine C

Explanation:

The computation of the expected benefit is shown below:

For Machine A

= $45,000 × 90%

= $40,500

For Machine B

= $80,000 × 50%

= $40,000

For Machine C

= $60,000 × 75%

= $45,000

If we see the expected benefit of each machine so we can say that the Machine C has the highest benefit generated from the available ones

8 0
2 years ago
What is the value today of $4,400 per year, at a discount rate of 8.3 percent, if the first payment is received 6 years from tod
Pepsi [2]

Answer:

Present Value = $290.20

Explanation:

The present value of a future payment can be calculated with the following formula:

PV = FV / (1 + i)N

Where i is the annual interest rate or discount rate, and t is the number of years until the payment will be received.

PV = Present Value = ?

FV = Payment = $4,400

i = 8.3% = 0.083

N = 20 - 6 = 14

PV = $4400 / (1 + 0.083)(20 - 6)

PV = $4400 / (1.083 * 14)

PV = $4400 / 15.162

PV = $290.1992

Present Value = $290.20 (Approximated)

4 0
2 years ago
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