Question

Although Ken Brown (discussed in Problem 3-17) is the principal owner of Brown Oil, his brother Bob is credited with making the company a financial suc- cess. Bob is vice president of finance. Bob attributes his success to his pessimistic attitude about business and the oil industry. Given the information from Problem 3-17, it is likely that Bob will arrive at a different decision. What decision criterion should Bob use, and what alternative will he select

Answer 1

                               FAVORABLE         UNFAVORABLE  

                                   MARKET                 MARKET

EQUIPMENT                  ($)                              ($)___                

Sub 100                       300,000                      – 200,000  

Oiler J                         250,000                      – 100,000  

Texan                            75,000                        – 18,000