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Fixed leasing agreement Pages Sold Revenue (1) (2) 30,000 45,000 60,000 75,000 90,000 30,000 $.20 = $ 6,000 45,000 $.20 = $ 9,000 60,000 $.20 = $ 12,000 75,000 $.20 = $ 15,000 90,000 $.20 = $ 18,000 Variable Costs (3) 30,000 $.15 = $4,500 45,000 $.15=$6,750 $1,500 Operati ng Income (Loss) (5) = (2) (3) (4) $ 0 $1,500 $ 750 0.20 150 60,000 $.15=$9,000 $1,500 $1,500 0.20 300 75,000 $.15=$11,25 0 90,000 $.15=$13,50 0 $1,500 $2,250 0.20 450 $1,500 $3,000 0.20 600 3-47 Fixed Costs (4) Prob abi lity (6) Expected Operating Income (7)=(5) (6 ) 0.20 $ 0 EA Expected value of fixed leasing agreement $1,500 Commission-based leasing agreement: Pages Variable Sold Revenue Costs (1) (2) (3) 30,000 30,000$.20 = $ 6,000 30,000 $.17 = $5100 45,000 45,000$.20=$ 9,000 45,000 $.17=$,7,650 60,000 60,000$.20 = $ 12,000 60,000 $.17 = $10,200 75,000 75,000$.20=$ 15,000 75,000 $.17=$12,750 90,000 90,000$.20=$ 18,000 90,000 $.17=$15,300 Expected value of commission based agreement Operating Income (4) = (2) (3) $900 $1,350 $1,800 $2,250 $2,700.00 Probabil ity (5) 0.20 0.20 0.20 0.20 0.20 Expected Operati ng Income (6)=(4)(5) $ 180 270 360 450 540 $1,800 Sunshine should choose the commission-based agreement because the expected value is higher than under the fixed cost leasing agreement

One sharpens the mind

10.1016/j.jneuroim.2021.577794 8 FrjdL