Please run a sensitivity analysis in Excel sheet, considering di?erent options f

Question

Please run a sensitivity analysis in Excel sheet, considering di?erent options for the economic growth, at nodes F and G, and check wether this will change the decision taken by any form.

Calculation and decisions for higher payoff: (0.7*120,000) +0.3 40,000AED 96,000 EV @ B EV @ F (Option# 2) EV @ G (Option# 3) EV @ D EV @ E EV @ C | ( 0.8" 200,000 ) + ( 0.2*60,000 ) | ( 0.4* 180,000 ) + ( 0.6*20,000 ) -AED 172,000 |-AED 84,000 EV @ F EV @ G (0.7*EV@D)+ (0.3* EV@E) - (0.7 172,000)(0.3 84,000) AED 172,000 AED 84,000 AED 145,600 AED 145,600 EV @ A ( Option# 1) | EV @ C Final Decision Tree AED 96.000 AED 120.000 Economv grows ((0.7) No growth (0.3) (0.8) AED172.000 grows AED 40.000 AED 200.000 Option# 2 Build home AED 145.600 No growth(0.2) Sell Land ci AED 60.000 AED 172.000 AED 60.000 No growth (0.3) AED 180.000 AED 145.600 Option# 3 Develop Land No growth (0.6) AED 84.000 AED 84.000 ell Land AED 20.000 AED 20.000 Decision tree Recommendation So, since option purchase land (node C) has better payoff, so at decision (node A) we will select option#1-(node C) Moving forward outcomes of option (node C) are decision (node D and E) At decision (node D) we will select building the house option#2. (node F) At decision (node E) we will select the option#3 ofdeveloping the land-(n0de G) o

Explanation / Answer

The options at node F shall only change in cases where the probability of growth in the economy is less than that no growth.

Also in case of node G --> Same shall be scenario as mentioned at node F.

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