A builder has located a piece of property that she would like to buy and eventually build on. The land is currently zoned for four homes per acre, but she is planning to request new zoning. What she builds depends on approval of zoning requests and your analysis of this problem to advise her. With her input and your help, the decision process has been reduced to the following costs, alternatives, and probabilities:
Cost of land: $2 million.
Probability of rezoning: 0.60.
If the land is rezoned, there will be additional costs for new roads, lighting, and so on, of $1 million.
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