Math Solutions

(Solution Library) Interest Rates Project Decline Stable Increase Office Building 0.5 1.7 4.5 Parking Lot 1.5 1.9 2.4 Warehouse 1.7 1.4 1 Shopping Mall 0.7 2.4

Question: Interest Rates

Project Decline Stable Increase
Office Building 0.5 1.7 4.5
Parking Lot 1.5 1.9 2.4
Warehouse 1.7 1.4 1
Shopping Mall 0.7 2.4 3.6
Condominiums 3.2 1.5 0.6

The Landloc real estate development firm has hired an economist to assign a probability to each direction interest rates may take over the next five years. There is a 0.50 probability that interest rates will decline, a 0.40 probability that rates will remain stable, and a 0.10 probability that rates will increase.

  1. Using expected value, determine the best project.
  2. Determine the expected value of perfect information.

Price: $2.99
Solution: The downloadable solution consists of 2 pages
Deliverable: Word Document


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