Trusted by Students Everywhere
Why Choose Us?
0% AI Guarantee

Human-written only.

24/7 Support

Anytime, anywhere.

Plagiarism Free

100% Original.

Expert Tutors

Masters & PhDs.

100% Confidential

Your privacy matters.

On-Time Delivery

Never miss a deadline.

You are planning to invest your money in the health care services

Finance Dec 21, 2020

You are planning to invest your money in the health care services. Since you do not have a clear idea about the health care services needed by the community, you asked a research center to help in identifying the investment opportunities open to you. The research center conducted deep investigation and prepared a report that contains the following information First: There are (4) different investment opportunities. Second: The initial investment for each of the available alternatives, the expected cash inflow and the probability for each are as follows 1. Health program A a. The initial investment is SR 235000 b. There is a 50% chance to have SR 400000 cash inflow c. There is a 25% chance to have SR 220000 cash inflow d. There is a 15chance to have SR 200000 cash inflow e. There is a 10% chance to have SR - 200000 cash infl inflow 2. Health program B a. The initial investment is SR 175000 b. There is a 20% chance to have SR 300000 cash inflow c. There is a 30% chance to have SR 230000 cash inflow d. There is a 40% chance to have SR 100000 cash intlow c. There is a 10% chance to have SR 90000 cash inflow 3. Health program a. The initial investment is SR 230000 b. There is a 50% chance to have SR 400000 cash inflow 6. There is a 15% chance to have SR 150000 cash inflow d. There is a 10% chance to have SR 175000 cash inflow e. There is a 25% chance to have SR - 100000 cash inflow 4. Health program D a. The initial investment is SR 185000 b. There is a 35% chance to have SR 250000 cash inflow C. There is a 45% chance to have SR 200000 cash inflow d. There is a 10% chance to have SR 175000 cash inflow e. There is a 10% chance to have SR 100000 cash inflow Use the Decision Tree Model to choose the best health program.

Expert Solution

Calculation of NET INFLOW i.e. Total Cash Inflow - Initial investment.

Option with the heighest Net Inflow will be selected for investment.

option 1 :

SR 400000 x 50% = SR 200000

ADD: SR 220000 x 25% = SR 55000

ADD: SR 200000 x 15% = SR 30000

LESS: SR 100000 x 10% =( SR 10000)

Total SR 275000

Less Initial Investment (SR 235000)  

= Net Inflow = SR 40000

option 2 :

SR 300000 x 20% = SR 60000

ADD: SR 150000 x 30% = SR 45000

ADD: SR 100000 x 40% = SR 40000

ADD: SR 90000 x 10% = SR 9000

Total SR 154000

Less Initial Investment (SR 175000)  

= Net Inflow = - SR 21000

option 3 :

SR 400000 x 50% = SR 200000

ADD: SR 150000 x 15% = SR 22500

ADD: SR 175000 x 10% = SR 17500

LESS: SR 100000 x 25% =( SR 25000)

Total SR 215000

Less Initial Investment (SR 230000)  

= Net Inflow = - SR 15000

option 4 :

SR 250000 x 35% = SR 87500

ADD: SR 200000 x 45% = SR 90000

ADD: SR 175000 x 10% = SR 17500

ADD: SR 100000 x 10% =  SR 10000

Total SR 205000

Less Initial Investment (SR 185000)  

= Net Inflow = SR 20000

Archived Solution
Unlocked Solution

You have full access to this solution. To save a copy with all formatting and attachments, use the button below.

Already a member? Sign In
Important Note: This solution is from our archive and has been purchased by others. Submitting it as-is may trigger plagiarism detection. Use it for reference only.

For ready-to-submit work, please order a fresh solution below.

Or get 100% fresh solution
Get Custom Quote
Secure Payment