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Read the information below and come up with some recommendations for Sophia. Based on the...

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Accounting

Read the information below and come up with some recommendations for Sophia. Based on the details given, what should we do here and why?

Please provide a brief 1 page write up.

Sophia wants to open a small shoe shop in downtown. Her options are to open a small shop, a medium-sized shop, or no shop at all. The market for a shoe shop can be good, average, or bad. The probabilities for these three possibilities are 0.3 for a good market, 0.5 for an average market, and 0.2 for a bad market. The net profit or loss for the medium-sized and small shops for the various market conditions are given in the following payoff table: Building no shop at all yields no loss and no gain. What do you recommend?

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Outcomes Alternative Good market Average market Bad market Small shop $ 70,000 $20,000 -$35,000 Medium shop $95.000 $30,000 - $55,000 No shop $0 $0 $0 Probabilities 0.3 0.5 0.2

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