Homework Answers
| Airport at X | Airport at Y | |
| Alternatives | ||
| Buy land at X | 14 | -15 |
| Buy land at Y | -14 | 22 |
| Buy land at X and Y | 0 | 7 |
| Do nothing | 0 | 0 |
| 0.6 | 0.4 |
Payoff with buying land at X = 0.6x14+0.4x(-15 )= 2.4
Payoff with buying land at Y = 0.6x(-14) +0.4x22 = 0.4
Payoff with buying land at X and Y = 0+0.4x7 =2.8
Payoff with doing nothing =0
Payoff with buying land at both locations is the most attractive option as it has highest payoff of 2.8 million Euros
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