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Solution) HiEd has to decide on construction of new dorms. They can build a small dorm or a large dorm. They c

Question: HiEd has to decide on construction of new dorms. They can build a small dorm or a large dorm. They could also decide to build nothing at all. The impact on HiEd's net revenue is given in the table below:

	Big Increase	Small Increase	Decrease
No building	10,000	12,000	-10,000
Small Dorm	85,000	120,000	-20,000
Large dorm	110,000	50,000	-80,000

a) If HiEd takes an optimistic approach, what should they do?

b) If HiEd takes a pessimistic approach, what should they do?

c) An educational consultant reports that there is a 40% chance of a small enrollment increase and a 10% chance of a large increase in enrollment. What should HiEd do?

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