MAT 540 WEEK 2
ApprovedPapers3) A local real estate investor in Orlando is considering three alternative investments: a motel, a theater, or a restaurant. | |||||||||||||||||||||||||||||||||||||||||||||
The motel and restaurant will be adversely or favorably affected by the availability of gasoline and the number of tourists, | |||||||||||||||||||||||||||||||||||||||||||||
while the theater will be relatively stable under any conditions. | |||||||||||||||||||||||||||||||||||||||||||||
The following payoff table shows the profit ( or losses) resulting from each investment. | |||||||||||||||||||||||||||||||||||||||||||||
Determine the best investment using the following decision criteria: | |||||||||||||||||||||||||||||||||||||||||||||
a) Maximax | |||||||||||||||||||||||||||||||||||||||||||||
b) Maximin | |||||||||||||||||||||||||||||||||||||||||||||
c) Minimax regret | |||||||||||||||||||||||||||||||||||||||||||||
d)Hurwicz (0.4 | |||||||||||||||||||||||||||||||||||||||||||||
e). Equal Likelihood
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Determine the project to invest | |||
and the expected value of perfect information. | |||
Interest Rate | |||
Decision | Decline | Stable | Increase |
Probabilities | 50% | 40% | 10% |
Office park | $ 0.50 | $ 1.70 | $ 4.50 |
Office building | $ 1.50 | $ 1.90 | $ 2.50 |
Warehouse | $ 1.70 | $ 1.40 | $ 1.00 |
Mall | $ 0.70 | $ 2.40 | $ 3.60 |
Conominiums | $ 3.20 | $ 1.50 | $ 0.60 |
Ideal | $ 1.70 | $ 1.90 | $ 4.50 |
Determine the best decision using the following decision criteria. | |||
a) Maximax | |||
b) Maximin | |||
c) Equal likelihood | |||
d) Hurwicz (0.5) | |||
Economic Conditions | |||
Degree Program | Recession | ||
Graphic Design | $145,000 | ||
Nursing | $150,000 | ||
Real Estate | $115,000 | ||
Medical technology | $130,000 | ||
Culinary Technology | $ 115,000.00 | ||
Computer technology | |||
Ideal | $150,000 |
- 9 years ago