Chapter 15 Case Problem Property Purchase Strategy
Chapter 15 Case Problem Property Purchase Strategy
BAN-6093-OL2
Trine University
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RUNNING HEAD: Chapter 15 Case Problem- Property Purchase Strategy
Objective: The objective of this case study is to perform an analysis and figure out whether
Oceanview should submit the $5 million bid and to provide reasoning for my recommendations.
1. Below is the decision tree that I created to show the logical sequence of this case study
decision problem.
Decision square (5) shows what the scenario would look like if there is not any market
research info available. If there is not an active bid at decision square (5) then Oceanview will
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RUNNING HEAD: Chapter 15 Case Problem- Property Purchase Strategy
not be receiving any costs or revenues. There for Oceanview would make $0 from this. Now on
the flip side if the company does submit the $5,000,000 bid there is a 0.2 chance (or 20%) that it
will be accepted. On top of that if Oceanview’s bid goes on to get accepted there is a 0.3 chance
(or 30%) that there will be changes in the zoning policy. Considering that this zoning policy
doesn’t change then when Oceanview purchases the property they are going to be giving up their
$500,000 deposit as discussed in the case study prompt. This is shown in the above decision tree
This course of action could be taken but there will be the risk present that the zoning policy
doesn’t change and Oceanview loses the money from their deposit.
3. Considering the information above I think the Oceanview should utilize the market
research conducted.
So, if it passes then I think Oceanview should utilize the market research conducted. But if it
doesn’t pass then I don’t think that Oceanview should utilize the market research conducted.
would cost them $274,700 for the info. I don’t think that the value that Oceanview will get
in the long run from the market research info will be well worth it for them.
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RUNNING HEAD: Chapter 15 Case Problem- Property Purchase Strategy
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