Consider the Following to Answer the Question(s) Below

question 13

Multiple Choice

Consider the following to answer the question(s) below:
A land owner is considering a community development project. Even though he realizes that the current market for housing is not very favourable, he believes that there will be an influx of retirees into the area within the next five years. He is trying to decide between two alternatives: (1) building detached homes in a planned retirement community or (2) building a smaller townhouse/condominium complex. Mortgage interest rates will affect his outcomes and the applicable payoff (in $ millions) table is shown below.
-According to the maximin approach, the land owner should

• A) build the active retirement community if interest rates go down
• B) build the active retirement community
• C) build townhouses/condominiums if interest rates go down
• D) build townhouses/condominiums
• E) build either the active retirement community or townhouses/condominiums

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