Problem 2: Uncertainty and Risk Analysis The Indah Village company won a tender to develop a post-Covid-19 tourist village in Bali through an existing workshop, with 3 options: 1. Enlarge existing workshops (increase investment) 2. Leaving the workshop as it is (status quo) 3. Selling the workshop after the project ends Profit will greatly depend on the next 3 years, if it is good the probability is 0.7 and if it is bad the probability is 0.3. Each pay off is: Decision Travel Conditions Investation Status quo Sell Well 800,000,000 1,300,000,000 320,000 Bad 500,000,000 (150,000,000) 320,000,000

Problem 2: Uncertainty and Risk Analysis The Indah Village company won a tender to develop a post-Covid-19 tourist village in Bali through an existing workshop, with 3 options: 1. Enlarge existing workshops (increase investment) 2. Leaving the workshop as it is (status quo) 3. Selling the workshop after the project ends Profit will greatly depend on the next 3 years, if it is good the probability is 0.7 and if it is bad the probability is 0.3. Each pay off is: Decision Travel Conditions Investation Status quo Sell Well 800,000,000 1,300,000,000 320,000 Bad 500,000,000 (150,000,000) 320,000,000

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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