Emil Hansen Is Interested in Leasing a Sports-Utility Vehicle and Has

question 51

Essay

Emil Hansen is interested in leasing a sports-utility vehicle and has contacted three automobile dealers for pricing information. Each dealer offered Emil 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 and the details are given in the below table.

Emil decided to choose the lease option that will minimize his total 24-month cost. Emil is not sure how many miles he will drive in the next two years. Hence, for the purpose of decision, assume that Emil 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 Emil's problem.

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