Quantative Method

QUESTION SHEET OF FINAL TERM PROJECT

(INDIVIDUAL ASSIGNMENT)

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As requirement, each student must select ONE out of the following questions in order to have the individual project completed.

CONCEPT 01: DECISION ANALYSIS

Question 1.1:

Steeley Associates, Inc., a property development firm, purchased an old house near the town square in Concord Falls, where State University is located. The old house was built in the mid-1800s, and Steeley Associates restored it. For almost a decade, Steeley has leased it to the University for Academic Office Space. The house is located on a wide lawn and has become a town landmark. However, in 2008, the lease with the university expired, and Steeley Associates decided to build high-density student apartments on the site, using all the open space. The community was outraged and objected to the town council. The legal counsel for the town spoke with a representative from Steeley and hinted that if Steeley requested permit, the town would probably reject it. Steeley had reviewed the town building code and felt confident that its plan was within the guidelines, but that did not necessarily mean that it could win a lawsuit against the town to force the town to grant a permit. The principals at Steeley Associates held a series of meetings to review their alternatives. They decided that they had three options: They could request the permit, they could sell the property, or they could request a permit for a low-density office building, which the town had indicated it would not fight. Regarding the last two options, if Steeley sells the house and property, it thinks it can get $900,000. If it builds a new office building, its return will depend on town business growth in the future. It feels that there is a 70% chance of future growth, in which case Steeley will see a return of $1.3 million (over a 10-yearplanning horizon); if no growth (or erosion) occurs, it will make only $200,000.If Steeley requests a permit for the...