Construct an Excel spreadsheet to analyze Rob\'s offers On the basis of expected

Question

Construct an Excel spreadsheet to analyze Rob's offers On the basis of expected value what is the best choice for Rob? What is the risk associated with this choice? A computer company is contemplating whether to buy a new server, router, or phone system. The returns from each will be determined by whether the company gets picked for a contract. The probability that the company will get the contract is 70%, and the probability that the company doesn't get the contract is 30% Construct an Excel spreedsheet to determine the equipment that will give the best-expected returns. Kristine is helping her cousin login (5 year, old) develop his business spiprit. He can sell either lemonadr or coffee at his corner stand. If it is a sunny day,Login will sell 55 glasses of lemonade and 12 cups of cofee. If it is an overcast day. Login will sell 10 glasses of lemonade and 40 cups of cofee.Both of the beverages sell for 50.50. The weather forecast calls for 40% chance of rain, 40% chance of sun, 20% chance of overcast.

Explanation / Answer

This is the information you need to put into the spreadsheet: (each item needs to be in its own cell)

Purchase            E(r)

Server                    =(.7*70,000)+(-10,000*.3)

Router                     =(.7*90,000)+(-15,000*.3)

Phone System          =(.7*60,000)+(-2,000*.3)

Here is what you will see:

Purchase                   E(r)

Server                       46,000

Router                      58,500

Phone System           41,400

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