Question: To model the uncertainty in this decision problem, Mr. Hunter and his partner have decided that the growth in rental income from one year to
To model the uncertainty in this decision problem, Mr. Hunter and his partner have decided that the growth in rental income from one year to the next could vary uniformly from 2% to 6% in years 2 through 5. Similarly, they believe that the V&C allowance in any year could be as low as 1% and as high as 5%, with 3% being the most likely outcome. They think that the operating expenses in each year should be normally distributed with a mean of 45% and standard deviation of 2%, but never should be less than 40% and never greater than 50% gross income. Finally, they believe that the property value growth rate could be as small as 1% or as large as 5%, with 2.5% being the most likely outcome
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