The CEO of Asempa farms limited is considering whether to plant this year's yam with a fertilizer or go organic (i. e. without fertilizer). In case of using a fertilizer, 10kg of either
the Platinum or Standard type fertilizer would be needed at the start of the planting year.
The Platinum type is GH¢1000 per kilogram and could lead to a high yield of 30 tons or a
moderate yield of 20 tons of yam at the end of the year. The Standard type is GH¢800 per
kilogram and could also lead to a high yield of 15 tons or a moderate yield of 10 tons of yam at
the end of the year.
The Standard has fewer chemicals and would lead to tastier yam that sells for a higher price than
that of Platinum. There is a probability of 0.7 that high yield would be recorded this year.
Market price for yam is uncertain and depends on the type as well as the volume of yam on the
market. Generally, a year of high yield results in higher volume whiles a year of moderate yield
leads to moderate volume of yam on the market. Even then, there is 60-40 chance that yam from
the Platinum fertilizer could sell for GH¢2000 or GH€2400 per ton in times of high yield, and
GH¢3000 or GH¢3500 per ton in times of moderate yield. The Standard fertilizer yam has a 40-
60 chance of selling for GH€4000 or GH¢5000 per ton in times of high yield, and GH¢5500 or
GH¢6000 in times of moderate yield.
If Asempa farms decide to go organic, it will need the supply of manure every month from a
local shop at a total cost of GH€7,000. This could lead to a high yield of 8 tons or a moderate
yield of 6 tons. Prices for organic yam are quite high and will sell for GH¢8,000 per ton in a high
yield year and GH¢10,000 in moderate yield year.
Ignore time value and answer the following questions.