# 1. A wood manufacturer must decide whether to merge with a larger company to make more investments. If they merge and it is a good sales year, there will be a \$910,000 profit; if they merge and it is a poor sales year, there will be a deficit of \$ 330,000. If they do not merge and it is a good sales year there will be a \$525,000 profit; if they do not merge and it is a poor sales year there will be a \$97,000 profit. If the probability of a good sales year is 0.26 and the probability of a poor sales year is 0.76, would merging with the larger company maximize the expected profit?

Question

1. A wood manufacturer must decide whether to merge with a larger company to make more investments. If they merge and it is a good sales year, there will be a \$910,000 profit; if they merge and it is a poor sales year, there will be a deficit of \$ 330,000. If they do not merge and it is a good sales year there will be a \$525,000 profit; if they do not merge and it is a poor sales year there will be a \$97,000 profit. If the probability of a good sales year is 0.26 and the probability of a poor sales year is 0.76, would merging with the larger company maximize the expected profit?