Refer once again to the International Expansion spreadsheet (xlxs) provided in theprevious module. Take note of the financial information provided in the “Revenue by
Location” and “Support Cost by Region.” Use the time value of money in your analysis to
assess the pros and cons of each region. Also, experiment with discount rates—one high,
middle, and low to understand the effect of cost of capital and risk.
First:
Calculate the mean revenue per location using the Revenue_By_Location worksheet.
Construct a decision tree that analyzes the possibility of achieving the mean revenue on
an ongoing basis along with a correspondingly high and low estimate. Use the following
data to construct your decision tree:
Region
Average
Rev. Est
Low Est
High Est
Prob. High
Prob.
Average
Prob. Low
UK1
Mean + 5% Mean – 5%
Mean +
15%
0.1
0.4
0.5
UK2
Mean + 7% Mean – 7%
Mean +
20%
0.15
0.5
0.35
EU1
Mean + 5%
Mean +
18%
0.05
0.6
0.35
EU2
Mean + 5% Mean – 10%
Mean +
25%
0.2
0.45
0.35
EU3
Mean + 8% Mean – 15%
Mean +
15%
0.1
0.4
0.5
Mean 10%
Next:
Construct your decision tree in Excel and calculate the expected value (refer to the
readings and resources in this module to identify how to perform these tasks in Excel).
Create a report on your analysis of the above sections, and include your recommendations.
Along with your spreadsheet, include a two-to-three-page report summarizing the findings.
Sources
ProQuest Ebook Central – Reader
Operational Decision-making in High-hazard Organizations. Hayes, 2017 (Hunt Library/Taylor
and Francis)
Chapter 8 Professionals at Work
Microsoft Excel Data Analysis and Business Modeling, (Office 2021 and Microsoft 365), 7th
Edition. Winston, 202021 (Hunt Library/O’Reilly)
Cover Page | Microsoft Excel Data Analysis and Business Modeling (Office 2021 and Microsoft 365), 7th
Edition (oreilly.com)
Chapter 1 Basic Worksheet Modeling
