Decision tree analysis and cost-benefit analysis


Question: Rosenblatt Enterprises used decision tree analysis and cost-benefit analysis in their decision to keep open their current plant. The quantitative costs of keeping the plant open were $5,000,000, while the quantitative benefits of keeping the plant open were only $3,000,000. Rosenblatt decides to keep the plant open. The decision to keep the plant open is appropriate if:

a Additional qualitative benefits exceed $2,000,000

b The relevant costs less the benefits of closing the plant were greater than $2,000,000

c It would never be appropriate

d Both A & B

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Accounting Basics: Decision tree analysis and cost-benefit analysis
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