QUESTION 2

The committee of a new golf club is setting the annual membership fee. The number of members depends on the membership fee charged and economic conditions. The forecast annual cash inflows from membership fees are shown below:

	Membership level
Membership fee	Low	Average	High
	N$000	N$000	N$000
N$600	360	480	540
N$800	400	440	480
N$900	360	405	495
N$1000	320	380	420

Required:

a) Explain the concept of maximax and determine the fee the committee would set if the maximax criterion is applied.

b) Explain the concept of maximin and determine the fee the committee would set if the maximin criterion is applied.

c) Explain the concept of minimax regret and determine the fee the committee would set if the minimax regret criterion is applied.