Decision Tree - Land Zoning
Not what you're looking for?
Decision trees and the Delphi Procedure
Scenario: All land within the municipality of Springfield is zoned for either agricultural, residential or commercial use. You have just purchased a parcel of agricultural land for $20,000 in the expectation that it will be rezoned next year. But the rezoning is controversial, and will be decided by the full City Council rather than just the Zoning Commission.
According to your inside sources, there's a 30% chance the land will be rezoned for commercial use; in that event, you'll be able to sell the land for $50,000. But the populists on the Council are pushing for more affordable housing; if they win the vote, which your sources think has a likelihood of 50%, then the land will be rezoned for residential use, and you'll only be able to sell it for $30,000. Of course, the Greens may win, and the land won't be rezoned at all. In that event, it will still be worth what you paid for it, but no more than that.
You've just been approached by Mr. Hi Roller. He's a land speculator like yourself, but he doesn't have your inside sources. He thinks the land will be rezoned next year, and has offered you $30,000 cash for it, right now.
Problem 1: Which alternative should you choose? Explain your decision process in detail by providing a table summarizing the factual data & explaining the computations used to obtain the numbers in the table by doing a decision tree.
Purchase this Solution
Solution Summary
The solution displays the use of decision tables and decision trees as tools to assist in deciding whether to keep a purchased piece of land scheduled for zoning in the following year, or to sell it to a Mr. Hi Roller.
Solution Preview
Decision Table
Alternatives Outcomes Value of alternatives
Name Cost Name Value (V) Prob (P) VxP Total (sum of VxP) Net
Buy ...
Purchase this Solution
Free BrainMass Quizzes
Understanding the Accounting Equation
These 10 questions help a new student of accounting to understand the basic premise of accounting and how it is applied to the business world.
Understanding Management
This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.
Managing the Older Worker
This quiz will let you know some of the basics of dealing with older workers. This is increasingly important for managers and human resource workers as many countries are facing an increase in older people in the workforce
Business Processes
This quiz is intended to help business students better understand business processes, including those related to manufacturing and marketing. The questions focus on terms used to describe business processes and marketing activities.
Basics of corporate finance
These questions will test you on your knowledge of finance.