Decision Analysis - Assignment

Running head: BUSINESS
Business
Name of the Student
Name of the University
Author Note

1BUSINESS
Table of Contents
Question 1:.................................................................................................................................3
Introduction:...........................................................................................................................3
Requirement a).......................................................................................................................3
Requirement b).......................................................................................................................4
Conclusion:............................................................................................................................4
Question 2:.................................................................................................................................5
Introduction:...........................................................................................................................5
Requirement a).......................................................................................................................5
Requirement b).......................................................................................................................5
Requirement c).......................................................................................................................9
Requirement d).....................................................................................................................12
Conclusion:..........................................................................................................................13
Question 3:...............................................................................................................................13
Introduction:.........................................................................................................................13
Discussion:...........................................................................................................................13
Conclusion:..........................................................................................................................17
Question 4:...............................................................................................................................18
Introduction:.........................................................................................................................18
Requirement a).....................................................................................................................18

2BUSINESS
Requirement b).....................................................................................................................20
Requirement c).....................................................................................................................21
Conclusion:..........................................................................................................................21
Question 5:...............................................................................................................................22
Requirement a).....................................................................................................................22
Requirement b).....................................................................................................................23
Requirement c).....................................................................................................................24
References list:.........................................................................................................................26

3BUSINESS
Question 1:
Introduction:
The report is prepared to conduct a decision analysis of three alternative actions that
would be selected by Dream catcher. These include international expansion, domestic
expansion and no change. Such courses of actions have been identified by analyzing the
strength and weakness of industry in which company operates.
Requirement a)
Normal View:
Particulars Pessimistic Average Optimistic TOTAL
(£000) (£000) (£000)
Probability 25% 55% 20% 100%
International Expansion:
Actual Profit 3750 6900 10950
ExpectedProfit 937.5 3795 2190 6922.5
DomesticExpansion:
Actual Profit 4300 7000 9750
ExpectedProfit 1075 3850 1950 6875
No Change:
Actual Profit 5500 6150 8350
ExpectedProfit 1375 3382.5 1670 6427.5
Formula View:

4BUSINESS
Particulars Pessimistic Average Optimistic TOTAL
(£000) =B4 =C4
Probability 0.25 0.55 0.2 =SUM(B5:D5)
International Expansion:
Actual Profit 3750 6900 10950
ExpectedProfit =$B$5*B8 =$C$5*C8 =$D$5*D8 =SUM(B9:D9)
DomesticExpansion:
Actual Profit 4300 7000 9750
ExpectedProfit =$B$5*B12 =$C$5*C12 =$D$5*D12 =SUM(B13:D13)
No Change:
Actual Profit 5500 6150 8350
ExpectedProfit =$B$5*B16 =$C$5*C16 =$D$5*D16 =SUM(B17:D17)
Requirement b)
The recommendations to Dream catcher would be done based on analysis of profit of
three courses of actions. It can be seen that expected profit generated from international
expansion stood at ₤ 6922.5 and while expanding domestically would generate profit of ₤
6875. On other hand, when there is no change, then business is generating profit of ₤ 6427.5.
Therefore, from the expected profit figures, it can be seen that it would be viable to undertake
the project of expanding internationally.
Conclusion:
After conducting decision analysis of three alternative course of actions, it can be
concluded that Dream catcher should go for international expansion as it is generating higher
profit compared to other options.

5BUSINESS
Question 2:
Introduction:
The report is prepared to ascertain the lenders for financing two possible properties
that Kyle Dier is seeking to buy. Mortgage alternatives are selected by determining applicable
interest rates and respective terms. Decision is also taken by considering several other factors.
Requirement a)
Three lenders that Kyle could borrow money for buying a one bedroom flat or a three-
bedroom house outside the town are ascertained. Such vendors include HSBC-UK, Virgin
money and Chesler building society. HSBC is one of the largest financial and banking service
organizations based in London. Virgin money is a provider of financial services that offers a
wide range of investment and savings product. Chesler building society is another financial
institution that offers financing and banking services.
Requirement b)
Normal View:
House within City:
Particulars
Interest Only Repayment Interest Only Repayment Interest Only Repayment
Property Value £3,50,000 £3,50,000 £3,50,000 £3,50,000 £3,50,000 £3,50,000
Less: Personal Contribution £1,20,000 £1,20,000 £1,20,000 £1,20,000 £1,20,000 £1,20,000
Balance Required £2,30,000 £2,30,000 £2,30,000 £2,30,000 £2,30,000 £2,30,000
Loan-to-Value Rate 80% 80% 75% 75% 65% 65%
Loan Amount £2,87,500 £2,87,500 £3,06,667 £3,06,667 £3,53,846 £3,53,846
Interest Rate p.a. 3.94% 3.94% 3.94% 4.79% 3.94% 4.99%
Period (in years) 20 20 20
Nos. of Payments p.a. 12 12 12 12 12 12
Total Nos. of Payments 240 240 240
MonthlyPayment £943.96 £1,733.12 £1,006.89 £1,988.46 £1,161.79 £2,333.27
Bank Financial Service Provider BuildingSociety