Please solve all
QUESTION 2 Amy Lloyd is interested in leasing a new Saab. Each dealer has offered a 36 month lease with no down payment due at the time of signing. Additional miles receive a surcharge on a per mile basis. The monthly lease cost, mileage allowance and the cost of additional miles can be summarized as follows: Dealer Monthly cost Mileage Allowance Cost per additional mile Forno Saab $299 36000 0.15 Midtown $310 45000 0.20 Hopkins $325 54000 0.15 Amy would like to MINIMIZE her total 36 month cost. But she is not sure how many miles she will drive per year, either 12,000, 15,000 or 18,000. With this she estimates her lease options. What is the decision to be made? How many miles to drive? Which lease company? What color car? What size car? QUESTION 3 10 Amy Lloyd is interested in leasing a new Saab. Each dealer has offered a 36 month lease with no down payment due at the time of signing. Additional miles receive a surcharge on a per mile basis. The monthly lease cost, mileage allowance and the cost of additional miles can be summarized as follows: Dealer Monthly cost Mileage Allowance Cost per additional mile Forno Sanb $299 36000 0.15 Midtown $310 45000 0.20 Hopkins $325 54000 0.15 Amy would like to MINIMIZE her total 36 month cost. But she is not sure how many miles she will drive per year, either 12,000, 15,000 or 18,000 With this she estimates her lease options. What is the chance event? How many miles to drive? What leasing company? What color car? What size car? Amy Lloyd is interested in leasing a new Saab. Each dealer has offered a 36 month lease with no down payment due at the time of signing. Additional miles receive a surcharge on a per mile basis. The monthly lease cost, mileage allowance and the cost of additional miles can be summarized as follows: Dealer Monthly cost Mileage Allowance Cost per additional mile Forno Saab $299 36000 0.15 Midtown $310 45000 0.20 Hopkins $325 54000 0.15 Amy would like to MINIMIZE her total 36 month cost. But she is not sure how many miles she will drive per year, either 12,000, 15,000 or 18,000 With this she estimates her lease options. Using the payoff table you constructed for this problem, determine the decision, state of nature and payoff under the optimistic, conservative and regret approaches: Decision State of Nature Payoff Optimist Conservative Regret QUESTION 5 Amy Lloyd is interested in leasing a new Saab. Each dealer has offered a 36 month lease with no down payment due at the time of signing. Additional miles receive a surcharge on a per mile basis. The monthly lease cost, mileage allowance and the cost of additional miles can be summarized as follows: Dealer Monthly cost Mileage Allowance Cost per additional mile Forno Saab $299 36000 0.15 Midtown $310 45000 0.20 Hopkins $325 54000 0.15 Amy would like to MINIMIZE her total 36 month cost. But she is not sure how many miles she will drive per year, either 12,000, 15,000 or 18,000. Suppose the probabilities that Amy drives 12000, 15000 and 18000 miles are 0.3, 0.4 and 0.3 respectively. What is the decision under expected value and what is the expected payoff? Payoff EV QUESTION 6 Amy Lloyd is interested in leasing a new Saab. Each dealer has offered a 36 month lease with no down payment due at the time of signing. Additional miles receive a surcharge on a per mile basis. The monthly lease cost, mileage allowance and the cost of additional miles can be summarized as follows: Dealer Monthly cost Mileage Allowance Cost per additional mile Forno Saab $299 36000 0.15 Midtown $310 45000 0.20 Hopkins $325 54000 0.15 Amy would like to MINIMIZE her total 36 month cost. But she is not sure how many miles she will drive per year, either 12,000, 15,000 or 18,000. Suppose the probabilities that Amy drives 12000, 15000 and 18000 miles are 0.5, 0.4 and 0.1 respectively. What is the decision under expected value and what is the expected payoff? EV Payoff
