Evaluate the Decision Table Problem $-$ Lease vs Buy problem using the Expected Value criterion and the Minimax Regret criterion, both applied to the total cost of car ownership over the two year period in question.Lease vs Buy Decision Table Problem

I am going to buy or lease a new car that I intend to keep for two years.

If I buy the car, I pay $$40,000.$ At the end of two years, I project that the trade$-$in value will be $$20,000$ minus $$\mathrm{.}50$ per mile beyond $20,000$ miles on the odometer. My net cost of driving for the two years will be $$40,000$ minus the trade$-$in value.

The cost of a two$-$year lease is $$17,000,$ plus a penalty of $$2\mathrm{.}00$ per mile beyond $24,000$ miles on the odometer. My net cost of driving for the two years will be $$17,000$ plus the mileage penalty if any.

My probability distribution for the number of miles I put on the car in two years is as follows:

Miles Driven $20,00024,00028,00032,000$

Probability $\mathrm{.}20\mathrm{.}40\mathrm{.}30\mathrm{.}10$

$($Assume I am going to do the same driving regardless of whether I lease or buy. In practice, could this be an invalid assumption?$)$

HINTS:

$$ You don't have to compute the net cost of each alternative all in one formula. It sometimes helps to compute and display the various components separately. $($Break the formula into smaller pieces. Compute and display a separate row for each component of the net cost, which you then combine to get the net cost under each mileage value.$)$

$$ In developing an Excel formula, don't be afraid to TRY SOMETHING AND SEE WHAT HAPPENS! You can compute the correct answer with a calculator, and compare your results to the correct answer. Then identify where $($and why$)$ your answer is wrong, and figure out how to correct that.

o Identify the problem $($difference between what you are getting vs$.$ the correct answer$)$

o Diagnose: Understand WHY your formula is not giving the correct answer

o Identify a potential "fix"

o Repeat