Question

Transrail is bidding on a project that it figures will cost $400,000 to perform. Using a 25% markup, it will charge $500,000, netting a profit of $100,000. However, ithas been learned that another company, Rail Freight, is also considering bidding on the project. If Rail Freight does submit a bid, it figures to be a bid about$470,000. Transrail really wants this project and is considering a bid with only a 15% markup to $460,000 to ensure winning regardless of whether or not Rail Freightsubmits a bid.
a. prepare a profit payoff table from transrail's point of view
c. If Rail Freight is known to submit bids on only 25% of the projects it considers, what decision should Transrail make?
d. Given the information is (c), how much would a corporate spy be worth to Transrail to find out if Rail Freight will bid?

Answer 1

profit of $100,000. However, it has been learned that another company, Rail Freight, is also considering bidding on the project. If Rail Freight doessubmit a bid, it figures to be a bid about $470,000. Transrail really wants this project and is considering a bid with only a 15% markup to $460,000 toensure winning regardless of whether or not Rail Freight submits a bid. points) c. If Rail Freight is known to submit bids on only 25% of the projects itconsiders,profit of $100,000. However, it has been learned that another company, Rail Freight, is also considering bidding on the project. If Rail Freightdoes submit a bid, it figures to be a bid about $470,000. Transrail really wants this project and is considering a bid with only a 15% markup to $460,000to ensure winning regardless of whether or not Rail Freight submits a bid. points) c. If Rail Freight is known to submit bids on only 25% of the projectsit considers,