Risk Avoidance

The only way that Apple would survive would be to come up with a revolutionary product that would increase sales.  But this would be a risky venture due to that cost and time of development.  If the forecast held true, the Apple would be losing an average of $400M per year, and there was a 64% chance that developing a new product would put them out of business.  One suggestion was for Apple to create the jPhone.  If the jPhone succeeded it would bring in an estimated $950M in net profits, however if it failed Apple would lose $900M (which includes the $400M they were forecasted to lose) in net profits.  A second suggestion was the iPhone, which was exactly like the jPhone, but it didn’t have the hologram facetiming feature.  Success if the iPhone would mean $850M in net profits while failure would mean $475M in losses.  After a risk analysis it was decided that Apple should develop the iPhone.

Alternatives	States of Nature		EMV
	Success	Failure
jPhone	$950M	-$900M	.36($950M) +.64(-$900M) = $-234M
iPhone	$850M	-$475M	.36($850M) + .64(-$475M) = $2M
No New Product	-$400	-$400	$-400M
Probability	.36	.64