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Harvest/ Lease (case facts (P(no rain)= 0.5, P(Rain)= 0.5, Investment for…
Harvest/ Lease
case facts
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Investment for orchid= $60,000
If rain hits loss of $10,000, revenue is $50000
If not hit by rain, pansare would get $90,000 as revenue, $30,000 as profit
Hold/ Lease probabilities (PR= Positive report, NR= Negative report)
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Conditional probabilities (PR= Positive report, NR= Negative report)
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Decision
Positive report, p= 0.45
Hold
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No rain= $ 6,380, p= 0.22
Lease= $3000 ($4,000-$1,000)
Negative report, p= 0.55
Hold
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No rain = $29,000, p= 0.73
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case facts
Lease of not to lease - if he leases he gets profit if $4,000
Climatology report- $1,000
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