I UPVOTE! I JUST NEED A THOROUGH ANSWER:) BUS-660 The Lake Placid Town Council decided to build a new community center t

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I UPVOTE! I JUST NEED A THOROUGH ANSWER:)
BUS-660
The Lake Placid Town Council decided to build a new community center to be used for conventions, concerts, and other public events, but considerable controversy surrounds the appropriate size. Many influential citizens want a large center that would be a showcase for the area. But the mayor feels that if demand does not support such a center, the community will lose a large amount of money. To provide structure for the decision process, the council narrowed the building alternatives to three sizes: small, medium, and large. Everybody agreed that the critical factor in choosing the best size is the number of people who will want to use the new facility. A regional planning consultant provided demand estimates under three scenarios: worst-case, base-case, and best-case. The worst-case scenario corresponds to a situation in which tourism drops substantially; the base-case scenario corresponds to a situation in which Lake Placid continues to attract visitors at current levels; and the best-case scenario corresponds to a substantial increase in tourism. The consultant has provided probability assessments of 0.10, 0.60, and 0.30 for the worst-case, base-case, and best-case scenarios, respectively.
The town council suggested using net cash flow over a 5-year planning horizon as the criterion for deciding on the best size. The following projections of net cash flow (in thousands of dollars) for a 5-year planning horizon have been developed. All costs, including the consultant's fee, have been included.
Demand Scenario
Center Size
Worst-Case
Base-Case
Best-Case
Small
400
500
660
Medium
-250
650
800
Large
-400
580
990
OPTIONS FOR ANSWER:
Identify the risk profiles for the medium and large alternatives.
Risk profile for medium-size community center:
OPTIONS FOR ANSWER:
-GRAPH I
-GRAPH II
-GRAPH III
Risk profile for large-size community center:
OPTIONS FOR ANSWER:
-GRAPH I
-GRAPH II
-GRAPH III
Given the mayor's concern over the possibility of losing money and the result of part (a), which alternative would you recommend?
OPTIONS FOR ANSWER:
Compute the expected value of perfect information.
-EVPI = $________
Do you think it would be worth trying to obtain additional information concerning which scenario is likely to occur?
OPTIONS FOR ANSWER: Best decision: (YES/NO)
Suppose the probability of the worst-case scenario increases to 0.2, the probability of the base-case scenario decreases to 0.5, and the probability of the best-case scenario remains at 0.3. What effect, if any, would these changes have on the decision recommendation?
OPTIONS FOR ANSWER:
The consultant has suggested that an expenditure of $150,000 on a promotional campaign over the planning horizon will effectively reduce the probability of the worst-case scenario to zero. If the campaign can be expected to also increase the probability of the best-case scenario to 0.4, is it a good investment?EXPLAIN:
b. Identify the risk profiles for the medium and large alternatives. (1) (ii) € Probability (iii) Probability Probability 0.6 0.4 02 0.6 04 02 0.6 0.4 02 -400 -400 -400 400 800 Net Cash Flow 0 Net Cash Flow 400 800 0 400 Not Cash Flow 800