a. Using expected value, determine the best project.

b. Determine the expected value of perfect information.

In Problem 13, the Place-Plus real estate development firm has hired an economist to assign a probability to each direction interest rates may take over the next 5 years. The economist has determined that there is a .50 probability that interest rates will decline, a.40 probability that rates will remain stable, and a .10 probability that rates will increase. a. Using expected value, determine the best project. b. Determine the expected value of perfect information. 0.5 0.4 Maximax Maximin Probabilities Project Office Park Office Building Warehouse Mall Condominiums 0.1 Interes Interest Interest Rate Decline Rate Stable Rate Increase 0.5 1.7 4.5 1.5 2.5 1.7 1.4 1 0.7 2.4 3.6 3.2 1.5 0.6 1.7 1.8 1.9 4.5 2.5 1.7 3.6 3.2 Equal Hurwithz Likelihood alpha=0.3 2.233 2.0 1.4 1.21 2.233 1.57 1.8 1.38 0.5 1.5 1 0.7 0.6 Expected Value 1.38 1.76 1.51 1.67 2.26 0 0 mm NO