Place$-$Plus, a real estate development firm, is considering several alternative development

projects. These include building and leasing an office park, purchasing a parcel of land and

building an office building to rent, buying and leasing a warehouse, building a strip mall, and

building and selling condominiums. The financial success of these projects depends on interest

rate movement in the next $5$ years. The various development projects and their $5-$year financial

SPREADSHEET MODELING $2$: CONTINUOUS ASSESSMENT $-2(35\%)$

$[$Duration $1\mathrm{.}5$hour: $10\mathrm{.}30$am $12$pm$]$

$2$

return $($in $$1,000,000$s$)$ given that interest rates will decline, remain stable, or increase, are

shown in the following payoff table:

Using Excel, determine the best investment using:

A$.$ The Maximax and Maximin criteria.

B$.$ The expected value criterion using the following probabilities: $0\mathrm{.}4$ for $$Decline$,0\mathrm{.}2$ for

$$Stable$,$ and $0\mathrm{.}3$ for $$Increase$$