Runninghead: Case Problem 1 1
Case Problem 1
Iletha Miller
QMB 5355
Robert Miner
November 06, 2015
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, Case Problem 1 2
Case Problem 1
Glenn Foreman, president of Oceanview Development Corporation, is considering
submitting a bid to purchase property that will be sold by sealed bid at a county tax foreclosure.
Glenn’s initial judgment is to submit a bid of $5 million. Based on his experience, Glenn
estimates that a bid of $5 million will have a 0.2 probability of being the highest bid and se-
curing the property for Oceanview. The current date is June 1. Sealed bids for the property must
be submitted by August 15. The winning bid will be announced on September 1. If Oceanview
submits the highest bid and obtains the property, the firm plans to build and sell a complex of
m
er as
luxury condominiums. However, a complicating factor is that the property is currently zoned for
co
eH w
single-family residences only. Glenn believes that a referendum could be placed on the voting
o.
rs e
ballot in time for the November election. Passage of the referendum would change the zoning of
ou urc
the property and permit construction of the condominiums. The sealed-bid procedure requires the
o
bid to be submitted with a certified check for 10% of the amount bid. If the bid is rejected, the
aC s
vi y re
deposit is refunded. If the bid is accepted, the deposit is the down payment for the property.
However, if the bid is accepted and the bid- der does not follow through with the purchase and
ed d
meet the remainder of the financial obligation within six months, the deposit will be forfeited. In
ar stu
this case, the county will offer the property to the next highest bidder. To determine whether
is
Oceanview should submit the $5 million bid, Glenn conducted some preliminary analysis. This
Th
preliminary work provided an assessment of 0.3 for the probability that the referendum for a
zoning change will be approved and resulted in the following estimates of the costs and revenues
sh
that will be incurred if the condominiums are built:
Cost of Revenue Estimates
Revenue from the condominium sales $15, 000, 000
This study source was downloaded by 100000805705997 from CourseHero.com on 04-28-2021 01:26:05 GMT -05:00
https://www.coursehero.com/file/12881453/IlethaMiller-QMB5355-12-week-4doc2/
Case Problem 1
Iletha Miller
QMB 5355
Robert Miner
November 06, 2015
m
er as
co
eH w
o.
rs e
ou urc
o
aC s
vi y re
ed d
ar stu
is
Th
sh
This study source was downloaded by 100000805705997 from CourseHero.com on 04-28-2021 01:26:05 GMT -05:00
https://www.coursehero.com/file/12881453/IlethaMiller-QMB5355-12-week-4doc2/
, Case Problem 1 2
Case Problem 1
Glenn Foreman, president of Oceanview Development Corporation, is considering
submitting a bid to purchase property that will be sold by sealed bid at a county tax foreclosure.
Glenn’s initial judgment is to submit a bid of $5 million. Based on his experience, Glenn
estimates that a bid of $5 million will have a 0.2 probability of being the highest bid and se-
curing the property for Oceanview. The current date is June 1. Sealed bids for the property must
be submitted by August 15. The winning bid will be announced on September 1. If Oceanview
submits the highest bid and obtains the property, the firm plans to build and sell a complex of
m
er as
luxury condominiums. However, a complicating factor is that the property is currently zoned for
co
eH w
single-family residences only. Glenn believes that a referendum could be placed on the voting
o.
rs e
ballot in time for the November election. Passage of the referendum would change the zoning of
ou urc
the property and permit construction of the condominiums. The sealed-bid procedure requires the
o
bid to be submitted with a certified check for 10% of the amount bid. If the bid is rejected, the
aC s
vi y re
deposit is refunded. If the bid is accepted, the deposit is the down payment for the property.
However, if the bid is accepted and the bid- der does not follow through with the purchase and
ed d
meet the remainder of the financial obligation within six months, the deposit will be forfeited. In
ar stu
this case, the county will offer the property to the next highest bidder. To determine whether
is
Oceanview should submit the $5 million bid, Glenn conducted some preliminary analysis. This
Th
preliminary work provided an assessment of 0.3 for the probability that the referendum for a
zoning change will be approved and resulted in the following estimates of the costs and revenues
sh
that will be incurred if the condominiums are built:
Cost of Revenue Estimates
Revenue from the condominium sales $15, 000, 000
This study source was downloaded by 100000805705997 from CourseHero.com on 04-28-2021 01:26:05 GMT -05:00
https://www.coursehero.com/file/12881453/IlethaMiller-QMB5355-12-week-4doc2/
