decesion analysis
...es that have probabilities associated with each chance. The chances are: 1. The prediction of the market research showing a pass or fail with zoning 2. Winning or losing the bid 3. Voters approving the zoning or denying the zoning The implication to the first decision of providing market research is that regardless what we do after this decision we are out of pocket by $15,000. The next implication brings us to the decision of bidding. If we win the bid and chance has it that the zoning does not get approved we will lose our deposit ($500,000). On the flip side, if we lose the bid we will get our deposit back. If we forgo the marketing study than there is a true profit of 2,000,000; however the probability of obtaining a profit of $2,000,000 with no market study is 6%. This is a high risk considering that the probability of the voters not passing the zoning is 14%. Using the expected value approach, the pay off of no market study is $50,00. Basically,...