Anvil Construction is considering investing in a large piece of land

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Anvil Construction is considering investing in a large piece of land. the land is currently zoned residential housing, but Anvil is planning to apply for re-zoning. What they will actual build on the land will depend on whether or not the re-zoning is approved. Anvil needs to decide whether or not to purchase the land based on the following costs, alternatives, and probabilities:

 

The land costs $2 million. There is a 60% possibility that the rezoning will be approved. If approved, there will be an additional cost of $1 million dollars for new roads, piping, and lighting.

 

If the rezoning is approved, Anvil will need to decide whether to build a shopping center or an apartment complex with 1,500 units. 

 

If the shopping center is selected, there is a 70% chance that they will be able to sell the shopping center to a large department store chain for $4 million over her construction cost. 

 

There is a 30% chance that instead, they will sell it to private equity company for $5 million over the construction cost. On the other hand, instead of the shopping center, they can build the apartment complex with 1,500 units. 

 

If the apartments are built, there is a 60% chance that the apartments can be sold to a real estate investment corporation for $3,000 each over construction cost and a 40% that they can be sold for only $2,000 each above the construction cost.

 

If the land is not rezoned, Anvil will comply with the existing zoning requirements and build 600 homes, where they will make $4,000 profit above construction cost on each one.

 

Anvil faces a dilemma. Should they by the land? If they buy the land and rezoning is approved, what should they do with the land? Help Anvil by analyzing the problem.

 

?Develop a decision tree, using word or excel add in treeplan, and determine the optimal decision strategy. make a recommendation