Question: Longhorn Storage has been opening self - storage mega locations throughout Texas. Once of the most popular locations is in Auston near the University of

Longhorn Storage has been opening self-storage mega locations throughout Texas. Once of the most popular locations is in Auston near the University of Texas, Austin campus. In order to meet the potential demand, Longhorn Storage has the option to build a new (second) facility just a quarter of a mile away, expanding its current site, or simply do nothing and potentially turn away demand. Analysts believe that there will be a 30% chance of a continued strong market for self-storage, a 40% chance that the market will remain stable, and a 20% chance that the market will decline. Longhorn predicts that their expected profit for the upcoming fiscal year will be as follows under each market scenario:
Strong Market
Stable Market
Declining Market
New Facility
$720,000
($110,000)
($500,000)
Expand Current Facility
440,000
(50,000)
(95,000)
Do Nothing
125,000
0
(50,000)
USE THE DRAWING TOOLS IN WORD OR POWERPOINT (OR EXCEL ADD-IN TRE

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