The Lake Placid Town Coun

The Lake Placid Town Coun

The Lake Placid Town Council decided to build a new community center to be used for conventions, concerts, and other public events, but considerable controversy surrounds the appropriate size. Many influential citizens want a large center that would be a showcase for the area. But the mayor feels that if demand does not support such a center, the community will lose a large amount of money. To provide structure for the decision process, the council narrowed the building alternatives to three sizes: small, medium, and large. Everbody agreed that the critical factor in choosing the best size is the number of people who will want to use the new facility. A regional planning consultant provided demand estimates under three scenarios: worst case, base case, and best case. the worst-case scenario corresponds to a situation in which tourism drops significantly; the base-case scenario corresponds to a situation in which Lake Placid continues to attract visitors at current levels; and the best-case scenario corresponds to a significant increase in tourism. The consultant has provided probability assessments of 0.10, 0.60, and 0.30 for the worst-case, bsae-case, and best-case scenarios.The town council suggested using net cash flow over a five year planning horizon as the criterion for deciding on the best size. The following projetions of net cash flow (in thousnads of dollars) for a five-year planning horizon have been developed. All costs, including the consultant’s fee, have been included.Center sizeSmall- worst= 400, base= 500, and best= 660medium- worst= -250, base- 650, and best= 800large- worst= -400, base= 580, and best= 990.a) what decision should Lake Placid make using the expected value approach?b) construct risk profiles for the medium and large alternatives. given the mayors concern over the possibility of losing money and the result of part (a), which alternative would you reccomend?c) compute the expected value of perfect information.Please show the work- she posted how to do this in a video and I have no understanding. I need to learn!

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