Please show all steps and use excel. Thanks!
Module 3-Decision Making Comprehensive Exercise #2 (Decision T The Bill Galen Development Company (BGD) Case The Bill Galen Development Company (BGD) is considering the purchase and commercial development of a piece of property. The property is now zoned residential. This means BGD needs t get a variance from the city in order to be able to commercially develop the property. The asking price for the property is $300,000. BGD estimates it can construct a shopping center for an additional $500,000, thus the costs would be S800,000 (includes the S300,000 to buy the property). BGD is fairly certain it can sell the completed shopping center for S950,000 A variance application costs S30,000 in fees and expenses and the variance process takes two months t get a decision on whether the variance is accepted or not. A friend of Bill Gallen knows someone who works in another city and this person works for the city council. He estimates that there is a 40% chance that the variance will be approved. IfBGD purchases the property and the variance is denied, the company will sell the property as undeveloped property for S260,000, resulting in a loss. Another option is that BGD can also purchase athree-month option on the property for S20.0 would allow BGD time for them to apply for the variance This means that for S20,000, BGD can purchase the option and wait for three months to then purchase the property; during the three months, n one else can purchase the land in that time period. If at the end of the time period BGD does not want to purchase the land, they are not obligated to do Finally, for S5,000, an urban planning consultant can be hired to study the situation and render an opinion as to whether the variance will be approved or denied. The city council has been reluctant to grant variances, so there is a 60% probability the consultant will predict denial of the variance. A friend of Bill Galen, a professor at the local university, estimates the following conditional probabilities for the consultant's opinion P(consultant predicts approval pproval granted for variance .700: P(consultant predicts denial Iapproval denied for variance .80. Bill Galen also has the option to appeal to the mayor should the variance be denied. It is estimated that it would cost an additional $10,000 in fees and expenses to make this appeal. IfBGD does not hire the consultant, the appeal has a 20% chance of reversing the decision (variance is approved). Should the consultant be hired and he ultimately predicts approval, but it ends up being denied, the appeal has a 30% chance of reversal. Should the consultant be hired and he ultimately pr denial and it does end up being denied, the appeal has a 10% chance of reversal. of course, BGD does not have to do anything (Does Nothing), even if the consultant is hired or not hired. To clarify the decision opti If the variance is approved in any situation, BGD will Build and then Sell (Meaning, only one branch-Variance Approved, Build, Sell-It is NOT three branches): If the variance i NOT approved in any situation, BGD will then Sell (Meaning, only one branch-Variance not Approved, Sell). Additionally, there are up to three (3)possible decisions that could be made depending happens-Variance Approved or Variance Denied. For example, BGD has to decide whethe or not to hire the consultant, BGD needs to make a decision on whether to buy the land, purchase an option, or do nothing, and should the variance be denied, BGD can either appeal the decision or not app
