The Elwood Company is considering hiring several new employees to handle an overload from a new contract. If the new people are not hired, there will be delays in contract work. The following payoff matrix has been prepared for analyzing whether new people are needed:
Hire New People
Do Not Hire New People
Retain new customers
$100,000
$75,000
Lose new customers
25,000
50,000
Based on past experience, the company expects to retain 75% of the new customers with no new hires.
Required:
Calculate the expected profit for the “no hire” decision.