Construct a decision tree that considers all of namibia

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Reference no: EM132708932

Namibia Business School (NBS) is a University of Namibia unit that develops and markets MBA courses offered over the Internet. NBS is currently located in Pioneerspark and employs 150 people. Due to strong growth, the company needs additional office space. The business school has the option of leasing additional space at its current location in Pioneerspark for the next two years, but after that will need to move to a new building. Another option the business school is considering is moving the entire operation to a small Okahandja town immediately. A third option is for the business school to lease a new building in Pioneerspark immediately. If the business school chooses the first option and leases new space at its current location, it can, at the end of two years, either lease a new building in Pioneerspark or move to the small Okahandja town.

The following are some additional facts about the alternatives and current situation:

1. The business school has a 75 percent chance of surviving the next two years.

2. Leasing the new space for two years at the current location in Pioneerspark would cost $750,000 per year.

3. Moving the entire operation to Okahandja town would cost $1 million. Leasing space would run only $500,000 per year.

4. Moving to a new building in Pioneerspark would cost $200,000, and leasing the new building's space would cost $650,000 per year.

5. The business school can cancel the lease at any time.

6. The business school will build its own building in five years, if it survives.

7. Assume all other costs and revenues are the same no matter where the business school is located.

a. Construct a decision tree that considers all of Namibia Business School's alternatives. Calculate the values of each alternative

Reference no: EM132708932

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