Amy Lloyd is interested in leasing a new car and has contacted three automobile dealers for pricing information. Each dealer offered Amy a closed-end 36 month lease with no down payment due at the time of signing. Each lease includes a monthly charge and a mileage allowance. Additional miles receive a surcharge on a per-mile basis. The monthly lease cost, the mileage allowance, and the cost for additional miles follow:

Dealer	Monthly Cost	Mileage Allowance	Cost per Additional Mile
Dealer A	$279	36,000	$0.15
Dealer B	$290	45,000	$0.20
Dealer C	$305	54,000	$0.15

Amy decided to choose the lease option that will minimize her total 36-month cost. The difficulty is that Amy is not sure how many miles she will drive over the next three years. For purposes of this decision she believes it is reasonable to assume that she will drive 12,000 miles per year, 15,000 miles per year, or 18,000 miles per year. With this assumption Amy estimated her total costs for the three lease options. For example, she figures that the Dealer A lease will cost her $10,044 if he drives 12,000 miles per year, $11,394 if he drives 15,000 miles per year, or $12,744 if he drives 18,000 miles per year.

Construct a payoff table. (Enter your answers in $).

Dealer	Annual Miles Driven
	12,000	15,000	18,000
Dealer A	$10,044	$11,394	$12,744
Dealer B	$	$	$
Dealer C	$	$	$

(d)

Suppose that the probabilities that Amy drives 12,000, 15,000, and 18,000 miles per year are 0.5, 0.4, and 0.1, respectively. What option should Amy choose using the expected value approach?

EV(Dealer A)=$ EV(Dealer B)=$ EV(Dealer C)=$ The best decision is ---Select--- Dealer A Dealer B Dealer C Dealer A or B Dealer A or C Dealer B or C .

(e)

Develop a risk profile for the decision selected in part (d). What is the most likely cost, and what is its probability?