Question: A commercial land developer specializes in building shopping centers and wants to develop some property near Hilton Head, SC. In order to develop the land,

A commercial land developer specializes in building shopping centers and wants to develop some property near Hilton Head, SC. In order to develop the land, the developer must bid to obtain the property. The developer has estimated the NPV without the cost of the land to be $15,500,000.

The developer estimates that the bids will most likely be $13,000,000 and will not be lower than

$12,000,000 and not more than $14,000,000.

a. Construct a cumulative distribution table and graph of the probability of winning the bid.

b. Construct a decision tree to determine the optimum bid.

c. Construct a simulation to determine the optimum bid.

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