Wilson Motors is looking to expand its operations by adding a second manufacturing location. If it is successful, the company will make $430 comma 000. If it fails, the company will lose $290 comma 000. Wilson Motors is trying to decide whether it should borrow the $290 comma 000 given the current bank loan rate of 12%. Should Wilson Motors borrow the money ifa. the probability of success is 91%?b. the probability of success is 85%?c. the probability of success is 75%?

a = 27400 ( borrow)

b = -21600  ( do not borrow)

c = -84600  ( do not borrow)

Step-by-step explanation:

a)Success probability = 88%

Expected payout = 88($430,000) +  0.12(-$270000) = $34600

Cost of borrowing = $270000(1+ 0.18) = 318600

EXPECTED PROFIT = 27400 you can borrow.

b)Probability of success  is 81%

Expected payout  = 0.18($430000) + 0.19(-$270000)  

= $297,000

Cost of borrowing  = $270000 (1+0.18) = 318600

Expected loss = -21600 do not borrow

c)Probability of of success = 72%

Expected payout = 0.72($430000) + 0.28(-$270000) = $234000

Cost of borrowing = $270000(1+ 0.18) = 318600

Expected loss = -84600 do not borrow

he sells x mount because thats eqivilqant to the maz and then divided into quarters

step-by-step explanation: