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Question: 6 12 pts kate smith is a property owner and...

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6 12 pts Kate Smith is a property owner and is faced with three cholces: A large-scale Investment to improve her apartments. This could produce a substantial pay or in terms of rtered remte nt of com ba require an investment of $1,500,000. After extensive market research Es considered that there is a 40% chance that a pay-off of S250000 wm be obtained, but there is a 60% chance that it will be only $800,000. A smaller scale project to re-do her landscape. At $500,000 thls is less costy but will produce a lower pay-off Research data suggests a 30% chance of a gain of $1,000,000 but a 70% chance of it being only $500,000. Continuing the present operation without change. It will cost nothing, but nelither will t t produce any pay-off. Tenants will be unhappy and it will become harder and harder to rent the apartments out when they become free. wi Kate make net profit or loss if she selects to invest in improving her apartments. What will be the expected profit/ loss: I Select ) (n) Will Kate make net profit or loss if she selects to invest in improving her landscaping. What will be the expected proft/ loss I Select ) ) What will be the net payoff if Kate selects to make no changes: [Select) Given the three expected payoffs, what should be Kates final choice: [ Select]
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