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ch05_solutions

# ch05_solutions - Exercise 5.4 8,750 Must Depart.25 5,000...

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Solutions Manual: Ch. 5: Decision Analysis/ 1 Exercise 5.4 Rent 1 Year Rent 2 Years Not Required to Depart (.75) Must Depart (.25) Not Required to Depart (.75) Must Depart (.25) 5,000 10,000 = 5,000 + PV 5,500 @ 10% 4,000 = 9,000 – PV 5,500 @ 10% Sublet (.6) No Sublet (.4) 9,000 9,000 8,750 6,000 8,250 8,250 Cheaper to rent for 2 years

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Solutions Manual: Ch. 5: Decision Analysis/ 2 Exercise 5.10 Oil: p=0.41 No oil: p=0.59 Sell
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