Question

Question 2
Sohar’s Engineering, Inc. manufactures components for the ever-changing mobile phone
business. It is considering moving from a small custom design facility to an operation capable of
much more rapid design of components. This means that the company must consider
upgrading its design equipment. Option 1 is to purchase two new desktop CAD (computer aided
design) systems at 20,000 OMR each. Option 2 is to purchase an integrated system and the
related server at 200,000 OMR. The sales manager has estimated that if the market for mobile
phones continues to expand, sales over the life of either system will be 900,000 OMR. The
odds of this happening is 40%. The likelihood of the market having already peaked to is
estimated at 60% and future sales would be only 400,000 OMR. What do you suggest the
company do and what is the EMV of this decision? (5 Mark

Answer 1

Select option 1 which gives more EMV than option 2.