Reference no: EM1355062
2. A builder has located a piece of property that she would like to buy and eventually build on. The land is currently zoned for four homes per acre, but she is planning to request new zoning. What she builds depends on approval of zoning requests and your analysis of this problem to advise her. With her input and your help, the decision process has been reduced to the following cost, alternatives, and probabilities.
• Cost of land: $2 million.
• Probability of rezoning: 60%
• If the land is rezoned, there will be additional costs for new roads, lighting, and so on, of $1 million.
If the land is rezoned, the contractor must decide whether to build a shopping center or 1,500 apartments that the tentative plan shows would be possible. If she builds a shopping center, there is a 70% chance that she can sell the shopping center to a large department chain for $4 million over her construction cost, which excludes the land; and there is a 30% chance that she can sell it to an insurance company for $5 million over her construction cost (also excluding the land). If, instead of the shopping center, she decides to build the 1,500 apartments, she places probabilities on the profits as follows: There is a 60% chance that she can sell the apartments to a real estate investment corporation for $3,000 each over her construction cost; there is a 40% chance that she can get only $2,000 each over her construction costs. (Both exclude the land cost.)
If the land is not rezoned, she will comply with the existing zoning restrictions and simply build 600 homes, on which she expects to make $4,000 over the construction cost on each one (excluding the cost of land).
Draw a decision tree of the problem. Determine the best solution. What is the expected value of the entire project?
|
Essentials for successful organizational team
: "Teams are an important aspect of organizational life, and the ability to manage them is an important component of manager and organization success"
|
|
What is the horizontal speed of the other fragment
: Light with a wavelength of 618 nm passes through a slit 7.52 wide and falls on a screen 1.88 m away. compute the linear distance on the screen from the central bright fringe to the first bright fringe above it.
|
|
Illustrate how many tickets should she buy
: Given that the demand for tickets is a binomial random variable with parameters n = 10 and p = 1/2, illustrate how many tickets should she buy in order to maximize her expected profit.
|
|
Employment empowerment
: describe methods for preparing employees at all levels for shifts in individual and group decision-making responsibility that come with the flat organizational model.
|
|
Explain and draw a decision tree of the problem
: Explain and Draw a decision tree of the problem and Determine the best solution and What is the expected value of the entire project?
|
|
Different sections of a research report
: Each of the different sections of a research report (abstract, introduction, method, results, conclusions, references) is important to the overall report, but different readers might find different sections to be of more interest to them.
|
|
Determine the magnitude of the acceleration of spacecraft
: A total electric charge of 4.50 nC is distributed uniformly over the surface of a metal sphere with a radius of 22 cm. The potential is zero at a point at infinity. Find the value of the potential at 45 cm from the center of the sphere.
|
|
Zero debt to successively higher levels of debt
: If a tax paying company went from zero debt to successively higher levels of debt, determine why would you expect its stock price to rise?
|
|
Determine eoq for bank cash
: A bank branch must keep a stock of cash on hand for customer withdrawals. The net daily withdrawal rate at the branch is $5,000. The opportunity cost of cash is 10% per year.
|