ow/connect.htmconsumer jd container tic apter 5s Assignment Help Save& Exit Subm

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ow/connect.htmconsumer jd container tic apter 5s Assignment Help Save& Exit Submit Check my work The lease of Theme Park, Inc., is about to expire. Management must decide whether to renew the lease for another 10 the motel. A consultant has estimated the net present value of Theme Park's two alternatives under each state of nature as shown below. Suppose that the management of Theme Park, Inc, has decided that there is a 0.29 probability that the motel's years or a proposed motel. The town planning board is currently debating the merits of granting approval to application will be approved. Motel Rejected 490.000 4,225,000 190,000 Relocate2,225,000 Renewi and Ret cspertcod mone a lue as the decision citrin, caulate expected monetary value for the Value eerences ne ocate a-2. Which alternative should it choose? O Relocate O Renew lease c. If management has been offered the option of a temporary lease while the town planning board considers the motel's application, response.) would you advise management to sign the lease? The lease will cost $29.000. (Omit the "5" sign in your 2 because the cost is 0 than EVP of s 1of3 Next > 7 8 9

Explanation / Answer

C) Yes, because the cost is less than EVPI of 3,141,850 as derived in section a.

The lease cost is 29,000 which is temporary till the time board decision on motel's application is finalized. Hence, once it is done, the Theme Park can take decision to Renew or Relocate in better way basis application status. Thus, it is worth taking temporary lease

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