Public storage provides an inexpensive and safe storage option with a current promotion of $1 rent for
Question:
Public storage provides an inexpensive and safe storage option with a current promotion of $1 rent for the first month. With an increased demand for self-storage options, PublicStorage is looking to expand its current availability in the Montclair area. At this time, PublicStorage has the following options: build a new facility off Route 46, expand its current site, or simply do nothing and potentially turn away demand. Analysts believe that there will be a 35% chance of a strong market for self-storage, a 45% chance that the market will remain stable, and a 20% chance that the market will decline. Accordingly, PublicStorage believes 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) |
HOW DO I USE THE DRAWING TOOLS IN WORD OR POWERPOINT (OR EXCEL ADD-IN TREE PLAN) TO MAKE AND SOLVE THE DECISION TREE? UPLOAD THE FILE CONTAINING THE SOLUTION HERE.
a.How do I use a decision tree analysis to analyze these alternatives?
b. Based on this analysis, what decision should PublicStorage pursue?
c. Given your recommendation, what would their expected annual profit be?
PLEASE, IF POSSIBLE, UPLOAD THE FILE CONTAINING THE SOLUTION HERE.
Expert Answer:
Here is the decision tree I created in Excel to analyze the alternatives for PublicStorage The assis... View the full answer
