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Sir, Can u plz help me in solving this question
Q.Tree Co is considering employing a sales manager. Market research has shown that a good sales manager can increaseprofit by 30%, an average one by 20% and a poor one by 10%. Experience has shown that the company hasattracted a good sales manager 35% of the time, an average one 45% of the time and a poor one 20% of the time.The company’s normal profits are $180,000 per annum and the sales manager’s salary would be $40,000 perannum.Based on the expected value criterion, which of the following represents the correct advice which Tree Co shouldbe given?
A-Do not employ a sales manager as profits would be expected to fall by $1,300
BEmploy a sales manager as profits will increase by $38,700
C-Employ a sales manager as profits are expected to increase by $100
D-Do not employ a sales manager as profits are expected to fall by $39,900You can find the answer if you download my suggested answers to the Paper F5 December 2014 exam.
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