The Lake placid town council has decided to build a new community centre to be used for conventions, concerts and other public events. But considerable controversy surrounds the appropriate size. Many influential citizens wants a large centre that would be a showcase for the area. But the mayor feels that if demand does not support such a centre, the community will lose a large amount of money. To provide structure for the decision process, the council narrowed the building alternatives to three sizes small, medium and large. Everybody agreed that the critical factor in choosing the best size is the number of people who will want to use the new facility. A regional planning consultant provided demand estimates under three scenarios worst case, base case and best case. The worst case scenario corresponds to a situation in which lake placid continues to attract visitors at current levels, and the best case scenario corresponds to increase in tourism. The consultant has provided probability assessments of 0.10, 0.60 and 0.30 for the worst case, base case and best case scenarios respectively. The town council suggested using net cash flow over a five year planning horizon as the criterion for deciding on the best size.The following projections of net cash flow in thousands of dollars, for a 5 year planning horizon have been developed. All costs including the consultants fee have been included. Center Size Demand scenario Worst Case Base Case Best Case Small 400 500 660 Medium -250 650 800 Large -400 580 990 Q1. The consultant has suggested that an expenditure of $ 150,000 on a promotional campaign over the planning horizon will effectively reduce the probability of worst case scenario to zero. If the campaign can be expected to also increase the probability of best case scenario to 0.4, is it a good investment? What is the actual worth of this campaign? (a) Yes, it is a good investment. The actual worth of this campaign is $172000. (b) Yes, it is a good investment. The actual worth of this campaign is $139000. (c) No, it is a bad investment. The actual worth of this campaign is $139000. (d) No, it is a bad investment. The actual worth of this campaign is $172000. Q2. What is the expected value of perfect information(EVPI) in thousand of dollars for Lake Placid? (a) 120 (b) 122 (c) 118 (d) 125 Q3. Based on the Expected monetary value (EMV) maximization approach what decision should Lake placid take? (a) Indifferent between small and medium centers (b) Indifferent between small and large centers (c) Indifferent between medium and large centers (d) Build a small center