Question

Jase Hansen is interested in leasing a sports-utility vehicle and has contacted three automobile dealers for...

Jase Hansen is interested in leasing a sports-utility vehicle and has contacted three automobile dealers for pricing information. Each dealer offered Jase a 24-month lease with no down payment due at the time of signing. Each lease includes a monthly cost, mileage allowances, and the cost for additional miles. The details are given in the below table.

Dealer

Monthly Cost ($)

Mileage Allowances

Cost per
Additional Mile ($)

True Vehicle

300

40,000

0.30

FCO

360

46,000

0.35

Jack’s Auto

410

50,000

0.15


Jase decided to choose the lease option that will minimize his total 24-month cost. He is not sure how many miles he will drive in the next two years. Hence, for the purpose of decision, assume that Jase wants to evaluate options of driving 20,000 miles per year, 23,000 miles per year, and 25,000 miles per year.

a. What is the decision, and what is the chance event?
b. Construct a payoff table for Jase’s problem.

I need a step buy step guide on how to get to the provided answer using excel 2016

Homework Answers

Answer #1

Payoff- calculation

Pay-off Matrix

Decision Tree:

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