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Please Help, this is not making sense. Last weeks info included Need Help with this portion only a Using last week's home $ Utility Value
Please Help, this is not making sense. Last weeks info included
Need Help with this portion only a Using last week's home $ Utility Value sales' problem and the following utility values, solve 388,000 your decision tree from last week using utility 384,000 0.90 0 Does anything change in 365,625 0.55 terms of your preferred agent? 363,750 0.50 o Create a Risk profile and 360,000 0.40 discuss the findings 339,500 0.25 336,000 01) Below is the decision tree model 120% Selling affhook Agent 20% Selling at $350 k Selfer ' Agent Agent. $ 30 9% Selling at $400 K 409/ Selling at $ 375 k 30% Selling at $350 k. Agent 100 % selling at $ 375 k 0/0 selling at $ 4ook ofo selling at $ 350% 2) As per the decission tree model, the expected value = sum of the products of probables * values Expected sales of Agent A = 20%*$400K + 60%*$375K +20%*$350K= $375K. Commission is 4% of sale value = 4% * $375K = $15K So the expected profit from agent A= Sale - commission = $375K- $15K= $360K Expected sales of Agent B = 30%*$400K + 40%*$375K +30%*$350K= $375K. Commission is 3% of sale value = 3% * $375K = $11.25K So the expected profit from agent B= Sale - commission = $375K- $11.25K= $363.75K Expected sales of Agent C =100%*$375K = $375K. Commission is 2.5% of sale value = 2.5% * $375K = $9.375K So the expected profit from agent C= Sale - commission = $375K- $9.375K= $365.625K As per the above information, the expected sale value of all the agents is same i.e $375K. But Agent A exhibits deterministic dominance as he is getting 4% commission which higher than the commission of Agent B and Agent C. 3) From Company point of view expected sales from all the three agents are same and net profit from agent C is higher than Agent A and Agent B because Agent C has the lowest commission of 2.5%. So the company can opt for Agent C over Agent A and Agent BStep by Step Solution
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