A development corporation purchased land that will be the site of a new luxury condominium complex. Management is consid

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A Development Corporation Purchased Land That Will Be The Site Of A New Luxury Condominium Complex Management Is Consid 1 (59.37 KiB) Viewed 14 times

A development corporation purchased land that will be the site of a new luxury condominium complex. Management is considering a six month market research study designed to learn more abou potential market acceptance of the condominium project. Management anticipates that, if conducted, the market research study will provide one of the following two results. 1. Favorable report (F): A significant number of the individuals contacted express interest in purchasing a condominium. 2. Unfavorable report (U): Very few of the individuals contacted express interest in purchasing a condominium. After deciding whether to conduct the market research study, they have the following two decision alternatives. d₁ = a small complex with 30 condominiums d₂ = a medium complex with 60 condominiums Following this, a chance event concerning the demand for the condominiums has two states of nature. s, = strong demand for the condominiums $₂ = weak demand for the condominiums The payoff table showing profit is as follows. States of Nature $₁ 5₂ Decision Alternative d₂ d₂ e (a) Show the decision tree. Decision Tree 1 400 Market Research 1600 No Market Research 1200 800 F U Description 3 4 5 10