Ask Question
17 February, 06:51

A swim club is designing a new pool to replace its old pool. The new pool would need to last for 10 years since the club is planning on relocating after 10 years. A concrete shell would cost $100,000 and last for all 10 years. Another option is to install a vinyl liner that would cost only $75,000 to install. However, the vinyl is not guaranteed to last for all 10 years, and it has a 33% chance of breaking down. Repair of the vinyl would cost $40,000 and would extend the life of the vinyl liner to the 10-year mark. If both options are acceptable to the swim club, which one minimizes their cost?

+3
Answers (1)
  1. 17 February, 08:03
    0
    vinyl liner

    Explanation:

    expected costs:

    concrete shell pool = $100,000 (100% guaranteed to last 10 years) vinyl liner = ($75,000 x 67% chance of lasting 10 years) + ($115,000 x 33% chance of needing repairs) = $50,250 + $37,950 = $88,200

    The expected costs of the vinyl liner option are lower than the costs of paying for a concrete shell. There is a 67% chance that the vinyl liner will cost less money and only 33% chance that it will cost more money.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “A swim club is designing a new pool to replace its old pool. The new pool would need to last for 10 years since the club is planning on ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers