6. The lease of Theme Park, Inc., is about to expire. Management must
6. The lease of Theme Park, Inc., is about to expire. Management must
decide whether to renew the lease for another 10 years or to relocate near the site of a proposed motel. The town planning board is currently debating the merits of granting approval to the motel. A consultant has estimated the net present value of Theme Park’s two alternatives under each state of nature as shown.
What course of action would you recommend using?
a. Maximax.
b. Maximin.
c. Laplace.
d. Minimax regret.
Motel Motel
Options Approved Rejected
Renew $ 500,000 $ 4,000
Relocate 5,000,000 100
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