Question 11Katie Lee had a car accident and was out of work for a year. Katie's parents believe that the accident was caused by a vehicle defect. Her family consulted some lawyers and planned to sue the vehicle manufacturer for $3.5 million. During negotiations, the legal team of the vehicle manufacturer offered a $700K settlement. Katie's family was advised that they would need to settle the $100K in legal fees if they agree to the settlement. Katie's parents asked their lawyer for advice and their lawyer told them that they have a 50% chance of winning the case. If the decision favors the vehicle manufacturer, Katie's family loses and will have to pay legal fees to the tune of $75K. However, they were cautioned that even the decision favors Katie, the full requested settlement is not guaranteed. The lawyer believes that there is a 50% chance that Katie's family would receive the full settlement amount they requested, of which Katie needs to settle $1.5 million in legal fees. There is a 50% chance that the jury will award Katie $1 million, of which 50% will be taken up by legal fees. Which of the following is Katie's best option?Group of answer choicesKatie should accept the settlement. She will receive $600,000.Cannot be determined.Katie should not accept the settlement and sue the company. She will receive $600,000.Katie should not accept the settlement and sue the company. She will receive $500,000.Katie should accept the settlement. She will receive $700,000.Katie should not accept the settlement and sue the company. She will receive $2 million.Katie should accept the settlement. She will receive $587,500.Katie should not accept the settlement and sue the company. She will receive $1.25 million. Question 12 A business owner is planning to strategize his company's growth. He can either buy, rent, or lease a new factory depending on how the business is doing. He was given the following payoff table (amounts in $000s) based on whether the business is doing good or the business is slow. AlternativeBusiness Doing GoodBusiness is SlowProbability.700.30Buy90-10Rent 7040Lease6055The probability of business doing good is 0.7 and the probability of slow business is 0.3.Using Laplace's method, the best strategy is ________.Group of answer choicesBuyLeaseCannot be determined.RentDo nothing Question 13 Consider the following payoff table that represents the profits earned for each alternative (Y1, Y2, and Y3) under the states of nature X1, X2, and X3. Using the maximax criterion, what would be the highest expected payoff? X1X2X3Probability.65.15.20Y1100145120Y275125110Y3958560Group of answer choices110Cannot be determined.100125145120 Question 14Felicidad Ramirez has come of age and now has access to a very substantial trust fund. The trust fund allows her to invest part of the money she will inherit. Felicidad is a multi-awarded pastry chef and has been working as a head baker in one of the trendy bakeries in New Jersey.With her newfound fortune, Felicidad is now considering opening her own bakery. She wants to start one in Seattle where she was born and raised. However, she also has some friends who believe that she should also open a "twin" branch in New York where they feel her trendy baked goodies would be very well-accepted by the market. Felicidad's friends think that it would be so cool if she could open the two locations at the same time. Felicidad is mulling over her options and is also considering to continue working at her current job and not open her own bakeries. Felicidad's best friend, Travis, helped her prepare a payoff table to help her analyze the situation. States of Nature(amounts are in $'000s)AlternativesVery FavorableFavorableUnfavorableOpen in Seattle38070-400Open in Seattle and New York20080-200Felicidad believes that there is a 30 percent chance that the market will be unfavorable, a 30 percent chance that it will be favorable, and 40 percent chance it would be very favorable. Travis advised Felicidad that they should hire Manny, a consultant, to help them analyze the market situation in greater detail. Manny mentioned that he provides a money-back guarantee.The most Felicidad should pay Manny for his services is $___________.

Question

Question 11Katie Lee had a car accident and was out of work for a year. Katie's parents believe that the accident was caused by a vehicle defect. Her family consulted some lawyers and planned to sue the vehicle manufacturer for $3.5 million. During negotiations, the legal team of the vehicle manufacturer offered a $700K settlement. Katie's family was advised that they would need to settle the $100K in legal fees if they agree to the settlement. Katie's parents asked their lawyer for advice and their lawyer told them that they have a 50% chance of winning the case. If the decision favors the vehicle manufacturer, Katie's family loses and will have to pay legal fees to the tune of $75K. However, they were cautioned that even the decision favors Katie, the full requested settlement is not guaranteed. The lawyer believes that there is a 50% chance that Katie's family would receive the full settlement amount they requested, of which Katie needs to settle $1.5 million in legal fees. There is a 50% chance that the jury will award Katie  $1 million, of which 50% will be taken up by legal fees. Which of the following is Katie's best option?Group of answer choicesKatie should accept the settlement. She will receive $600,000.Cannot be determined.Katie should not accept the settlement and sue the company. She will receive $600,000.Katie should not accept the settlement and sue the company. She will receive $500,000.Katie should accept the settlement. She will receive $700,000.Katie should not accept the settlement and sue the company. She will receive $2 million.Katie should accept the settlement. She will receive $587,500.Katie should not accept the settlement and sue the company. She will receive $1.25 million.  Question 12 A business owner is planning to strategize his company's growth. He can either buy, rent, or lease a new factory depending on how the business is doing. He was given the following payoff table (amounts in $000s) based on whether the business is doing good or the business is slow. AlternativeBusiness Doing GoodBusiness is SlowProbability.700.30Buy90-10Rent 7040Lease6055The probability of business doing good is 0.7 and the probability of slow business is 0.3.Using Laplace's method, the best strategy is ________.Group of answer choicesBuyLeaseCannot be determined.RentDo nothing   Question 13 Consider the following payoff table that represents the profits earned for each alternative (Y1, Y2, and Y3) under the states of nature X1, X2, and X3. Using the maximax criterion, what would be the highest expected payoff? X1X2X3Probability.65.15.20Y1100145120Y275125110Y3958560Group of answer choices110Cannot be determined.100125145120  Question 14Felicidad Ramirez has come of age and now has access to a very substantial trust fund. The trust fund allows her to invest part of the money she will inherit. Felicidad is a multi-awarded pastry chef and has been working as a head baker in one of the trendy bakeries in New Jersey.With her newfound fortune, Felicidad is now considering opening her own bakery. She wants to start one in Seattle where she was born and raised. However, she also has some friends who believe that she should also open a &#34;twin&#34; branch in New York where they feel her trendy baked goodies would be very well-accepted by the market. Felicidad's friends think that it would be so cool if she could open the two locations at the same time. Felicidad is mulling over her options and is also considering to continue working at her current job and not open her own bakeries. Felicidad's best friend, Travis, helped her prepare a payoff table to help her analyze the situation.  States of Nature(amounts are in $'000s)AlternativesVery FavorableFavorableUnfavorableOpen in Seattle38070-400Open in Seattle and New York20080-200Felicidad believes that there is a 30 percent chance that the market will be unfavorable, a 30 percent chance that it will be favorable, and 40 percent chance it would be very favorable. Travis advised Felicidad that they should hire Manny, a consultant, to help them analyze the market situation in greater detail. Manny mentioned that he provides a money-back guarantee.The most Felicidad should pay Manny for his services is $___________.

Accepted Answer

As per company policy it is only possible to solve one question. So solving the first one.

Alternative	Business Doing Good	Business is Slow
Probability	.70	0.30
Buy	90	-10
Rent	70	40
Lease	60	55

	X1	X2	X3
Probability	.65	.15	.20
Y1	100	145	120
Y2	75	125	110
Y3	95	85	60

	States of Nature (amounts are in $'000s)
Alternatives	Very Favorable	Favorable	Unfavorable
Open in Seattle	380	70	-400
Open in Seattle and New York	200	80	-200