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CubeStorage is a state-of-the-art storage facility. Due to increasing home prices, there has been an increased demand for storage facilities. CubeStorage is exploring growth
CubeStorage is a state-of-the-art storage facility. Due to increasing home prices, there has been an increased demand for storage facilities. CubeStorage is exploring growth options including building a new facility, expanding its current site, or simply doing nothing. At this point, industry analysts believe that going forward there will be a 35% chance of a strong market, a 45% chance that the market will remain stable, and a 20% chance that the market will decline. Accordingly, CubeStorage believes that their expected profit for the upcoming fiscal year will be as follows under each of these alternatives: Strong Market Stable Market Declining Market New Facility $570,000 ($90,000) ($350,000) Expand Current Facility 330,000 (20,000) (65,000) Do Nothing 110,000 0 (60,000) USE THE DRAWING TOOLS IN WORD OR POWERPOINT (OR EXCEL ADD-IN TREEPLAN), CREATE AND SOLVE THE DECISION TREE. UPLOAD THE FILE CONTAINING THE SOLUTION HERE. a. Use a decision tree analysis to analyze these decision alternatives. b. Based on your analysis, what decision should CubeStorage pursue? c. Given your recommendation, what would their expected annual profit be?
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