Turismo

Probability of highest Bid  (when it is $5 million )= 0.2
 Given Bid last date to submit is Aug 15 ; Bid announced on Sep 1
 As per Glenn Analysi
  Probability zoning change will approved in thereferendum = 0.3
 So Probability not approved  = 0.7
  Bid Requires 10% of the amount = $5,000,000 *0.1 = $500,000
 
  Total Revenue if the Bid accepted and zone changed  = $ 15,000,000
  Property  = $ 5,000,000
  Construction = $ 8,00,000
  So Profit  = $ 15,000,000-$13,000,000 =$ 2,000,000
    Marketing Survey Cost  = $ 15,000
   
  Let A is the  zone changed (as per glennanalysis )
        N is zone not changed
 So P(A) = 0.3  ; P(N) = 0.7
   Given Probabilities as per Market Research Firm
   P(As1 ) = 0.9 ; P(Ns1) = 0.1
   P(As2) = 0.2 ; P( Ns2) = 0.8
  Probabilityof Market Research gives the report that zone has changed = 0.3*0.9 + 0.7*0.2
                                                                                                             = 0.41 Probability of MR that zone hasnot changed  = 0.3*0.1  + 0.7*0.8  = 0.59
 
 
    If The Market research information is not available then Ocen view decision
 
 
 
  To reach construction
 Cost  = $ 5,000,000 + $ 8,000,000 = $13,000,000
  Profit  = $ 2,000,000
  If the Bid not accept then profit  = 0
  If the Bid is accepted and zone not changed then cost  = $50,000
  Profit  = -$50,000
  Expected (Monetary Value) amount  = $2,00,000 *0.3 + (-$50,000*0.7)
                              = $ 565,000
 
  If the Market research is conducted and on the basis of the Marketresearch
  Glenn took decision
  ** Assumption is Glenn go for a bid if the Market Research gives that zone is changed
   The cost = $15,000 (if the Bid is not accepted )
 Then profit = -$15,000 Cost = $15,000+$500,00(if the bid is accepted and Nov referendum is not favour to zone changing)
  Profit  = -$ 65,000
 
 If the Bid is accepted and Nov referendum is favour to zone changing
 ...