View the step-by-step solution to:

Following is the payoff table for the Pittsburgh Development Corporation (PDC) Condominium Project. Amounts are in millions of dollars. State of...

I need help figuring out the formula to answer both questions. I have an idea but I am not able to successfully get it

Screen Shot 2019-05-21 at 5.17.40 PM.png

Screen Shot 2019-05-21 at 5.17.40 PM.png

Following is the payoff table for the Pittsburgh Development Corporation (PDC) Condominium Project. Amounts are in millions of dollars. State of Nature Decision Alternative Strong Demand 51 Weak Demand 52
Small complex, d1 7 6
Medium complex, d2 12 6
Large complex, d3 19 -9 Suppose PDC is optimistic about the potential for the luxury high—rise condominium complex and that this optimism leads to an initial subjective probability assessment of 0.8
that demand will be strong (S1) and a corresponding probability of 0.2 that demand will be weak ($2). Assume the decision alternative to build the large condominium complex
was found to be optimal using the expected value approach. Also, a sensitivity analysis was conducted for the payoffs associated with this decision alternative. It was found
that the large complex remained optimal as long as the payoff for the strong demand was greater than or equal to $15.75 million and as long as the payoff for the weak demand was greater than or equal to -$22 million. a. Consider the medium complex decision. How much could the payoff under strong demand increase and still keep decision alternative d3 the optimal solution? If required,
round your answer to two decimal places. The payoff for the medium complex under strong demand remains less than or equal to $ X million, the large complex remains the best decision. b. Consider the small complex decision. How much could the payoff under strong demand increase and still keep decision alternative d3 the optimal solution? If required,
round your answer to two decimal places. The payoff for the small complex under strong demand remains less than or equal to $ E] X million, the large complex remains the best decision.

Recently Asked Questions

Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors.

-

Educational Resources
  • -

    Study Documents

    Find the best study resources around, tagged to your specific courses. Share your own to gain free Course Hero access.

    Browse Documents
  • -

    Question & Answers

    Get one-on-one homework help from our expert tutors—available online 24/7. Ask your own questions or browse existing Q&A threads. Satisfaction guaranteed!

    Ask a Question