1. A common complaint is that a new car will depreciate by 25% as soon as the new owner drives it off the lot. This information comes from resale price data from cars sold just months after the initial purchase. How does adverse selection imply that most cars depreciate much less?
2. Most pizza restaurants charge by the pie or by the slice. Cici's has found a niche by charging a flat rate for the meal and allowing as many visits to the pizza buffet as the customer desires. How does this affect the make-up of its clientele?

A new production system for a factory is to be purchased and installed for $169,853. This system will save approximately 300,000 kWh of electric power each year for a 6-year period. Assume the cost of electricity is $0.10 per kWh, and factory MARR is 15% per year, and the salvage value of the system will be $8,297 at year 6. Using the AW method to analyzes if this investment is economically justified

A- calculate the AW of the above investment and insert the result below.

B- Based on the AW value you got in the previous question, is this investment economically justified or not? type you explanation below

There are always risks associated with the experimentation of a new manufacturing process or with the entry into a new global market, the risks of failure. How should one decide to proceed or not to proceed with a risky venture? What is the proper level of risks to take? Book Title Engineering Management Author C. M. Chang ISBN 978-1-4987-3007-5

A new drug cures 70 ​% of the patients to whom it is administered. It is given to 28 patients. Find the probabilities that among these​ patients, the following results occur. Use the normal distribution approximation to the binomial distribution.

​(a) Exactly 22 are cured.

​(b) All are cured.

​(c) No one is cured.

​(d)14 or fewer are cured.

The manager for a growing firm is considering the launch of a new product. If the product goes directly to market, there is a 50 percent chance of success. For $184,000, the manager can conduct a focus group that will increase the product’s chance of success to 65 percent. Alternatively, the manager has the option to pay a consulting firm $399,000 to research the market and refine the product. The consulting firm successfully launches new products 80 percent of the time. If the firm successfully launches the product, the payoff will be $1.99 million. If the product is a failure, the NPV is zero. Calculate the NPV for each option available for the project.

Which action should the firm undertake?

Go to market now

Focus group

Consulting firm

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