The FIU Marching Band is out of money. It hurts when halftime music is provided by the

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The FIU Marching Band is out of money. It hurts when halftime music is provided by the band of the other team at a home game. They have two choices: apply for federal grant money or do a major fundraiser. They cannot do both. The band's manager believes he has a 90% chance that he will win a grant of $25,000 if he submits the grant application. Grants in this category are for a fixed amount, so if he loses the grant, he'll have no money to run the band. Based on his past fundraising experience, he estimates that if he runs a local fundraiser, he has a 30% chance of raising $30,000 and 70% chance of raising $20,000. Create a decision tree to help him determine which decision has the higher EMV.

a. What is the EMV of applying for a grant?

b. What is the EMV of doing a major fundraiser?

c. What should the band do?

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Management Science The Art Of Modeling With Spreadsheets

ISBN: 1301

4th Edition

Authors: Stephen G. Powell, Kenneth R. Baker

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