Question
on excel table and sheet please Assignment: Mr Dilshad Ali decided to lease a hybrid car to save on gasoline expenses and to do her
on excel table and sheet please
Assignment:
Mr Dilshad Ali decided to lease a hybrid car to save on gasoline expenses and to do her part to help keep the environment clean. The car he selected is available from only one dealer in the local area, but that dealer has several (3) leasing options to accommodate a variety of driving patterns. All the leases are for three years and require no money at the time of signing the lease.
The first option has a monthly cost of $333, a total mileage allowance of 36,000 miles (an average of 12,000 miles a year), and a cost of 0.35 per mile for any miles over 36,000.
The following table summarizes each of the three lease options:
3-Year Lease | Monthly Cost | Mileage Allowance | Cost per excess mile |
Option 1 | $333 | 36,000 | $ 0.35 |
Option 2 | $378 | 45,000 | $ 0.25 |
Option 3 | $430 | 54,000 | $ 0.15 |
Mr Dilshad Ali estimated that during the 3 years of the lease, there is a 40% chance that he will drive an average of 12,000 miles per year, a 30% chance that he will drive 15,000 miles a year, and a 30% chance that he will drive 18,000 miles a year. In evaluating these lease options, Dilshad Ali aims to keep his costs as low as possible.
Questions: (Total marks: 25)
Develop a payoff (cost) table for this situation.
What decision would Dilshad make if he was optimistic?
What decision would Dilshad make if he was pessimistic?
What decision would Dilshad make if he wanted to minimize her expected cost (monetary value)?
Calculate the expected value of perfect information for this problem.
Important: For all answers, please show ALL the workings (i.e. all steps)!
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started