Ask Question, Ask an Expert

+61-413 786 465

info@mywordsolution.com

Ask Financial Management Expert

You are responsible for constructing a new building. The building will have 7 floors. You are considering modifying the design of the structure with extra steel, utilities, and elevator shafts so that it will be easier to double the height of the building to 14 floors (after the building is constructed). You need to decide whether to modify the design of the building before the building is constructed. When the building is built with 7 floors, there will either be 7 occupants or 4 occupants. There is a 0.56 probability that there will be 7 occupants. If there are 4 occupants, your company will never choose to make the building taller. If there are 7 occupants, your company may decide to double the height of the building (to 14 floors). There is a 0.39 probability the building will have 14 total occupants and a 0.61 probability the building will have 11 total occupants. The revenue for the company depends on the number of occupants in the building: the revenue for 4, 7, 11, and 14 occupants is $4, $7, $11, and $14, respectively. NOTE: If there are originally 7 occupants and the building's height is doubled, assume the revenue of the company is either $11 or $14 . DO NOT ADD $7 +$11 or $7 +$14. The cost for the company depends on whether the design is modified and whether it chooses to double the height of the building. The cost to modify and double the height is $10. The cost to modify the building and not double its height is $7. The cost to double the height without modifying the design is $13. The cost of neither modifying or doubling the height is $3. Your company wants to maximize its expected profit (where profit is the revenue gained from the occupants minus the cost). What is the expected profit for the optimal option, rounded to the nearest tenth of a dollar? This includes whether or not to modify the design and wether or not to double the height

Financial Management, Finance

  • Category:- Financial Management
  • Reference No.:- M92758418

Have any Question?


Related Questions in Financial Management

Assignmentimagine you are the owner of a small business in

Assignment Imagine you are the owner of a small business in your hometown. Briefly describe your company in 3 to 5 sentences. Discuss the following in 525 to 700 words: Define the roles you play as a small business owner ...

Managerial financenbspplease submit a word document

Managerial Finance:  Please submit a Word document including your answers to the 4 questions at the end of the instructions.   Johnson Company The Johnson company and wants to increase its sales and would like to seek ad ...

1 analyze marketing opportunities using environmental

1. Analyze marketing opportunities using environmental scanning market data, measurement, and analysis. 2. Explain issues pertaining to marketing environment both internally and externally 3. Demonstrate an understanding ...

Assignment for pogo managing government finances -the

Assignment for POGO Managing Government Finances - The assignment questions are drawn from topics that may ask you to integrate the topics covered across the entire course - or certainly link different topics together in ...

Discussion forumby thursday of this week search current

Discussion Forum By Thursday of this week, search current news (less than 6 months old) and find an article about a company reporting key financial news (e.g., landing a large contract, reporting unusual profits or losse ...

Assignmentq1 a restaurant records the number of customers

Assignment Q1. A restaurant records the number of customers it receives for 15 days. The data is shown in the following . 140, 141, 171, 178, 187, 140, 238, 247, 254, 297, 205, 211, 206, 286, 187 a. Calculate the Q2, D6, ...

Assignment the art of negotiationresearch a current

Assignment : The Art of Negotiation Research a current conflict or negotiation in progress from the last 6 months like peace talks in the Middle East, a corporate merger, a labor dispute, etc. Write a six to eight (6-8) ...

Assume that hos could issue a zero coupon bond at an annual

Assume that HOS could issue a zero coupon bond at an annual interest rate of 4 percent with semiannua compounding for 20 years. If HOS receives $2,264.45 for the bond, how much would it have to pay at the maturity date?

Scenario 1you know from government legislation that the

Scenario 1) You know from government legislation that the legal tax rate on your property is 2.4% and the city's assessed value of your property is $155,000. However, your property is currently on the market for only $60 ...

Read through the tree trimming project case in chapter 13

Read through the Tree Trimming Project case in chapter 13 of the textbook. This case refers to the earned value (EV) of the owner, Will Fence's Tree Trimming business. Will briefly describes his techniques for EV. Based ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Why might a bank avoid the use of interest rate swaps even

Why might a bank avoid the use of interest rate swaps, even when the institution is exposed to significant interest rate

Describe the difference between zero coupon bonds and

Describe the difference between zero coupon bonds and coupon bonds. Under what conditions will a coupon bond sell at a p

Compute the present value of an annuity of 880 per year

Compute the present value of an annuity of $ 880 per year for 16 years, given a discount rate of 6 percent per annum. As

Compute the present value of an 1150 payment made in ten

Compute the present value of an $1,150 payment made in ten years when the discount rate is 12 percent. (Do not round int

Compute the present value of an annuity of 699 per year

Compute the present value of an annuity of $ 699 per year for 19 years, given a discount rate of 6 percent per annum. As