1. A company is currently located in Rafah and employs 50 people.Due to strong growth the company needs additional office space. Thecompany has the option of renting additional space at its currentlocation in Rafah for the next two years, but after that will needto move to a new building. Another option the company isconsidering moving the entire operation to Jabalia immediately. Athird option is for the company to rent a new building in Rafahimmediately. If the company chooses the first option and rent newspace at its current location, it can, at the end of two years,either rent a new building in Rafah or move to Jabalia.

          Thefollowing are some additional facts about the alternatives andcurrent situation:

• The company has a 75 percent chance of surviving the next twoyears.
• Renting the new space for two years at the current location inRafah would cost $750,000 per year.
• Moving the entire operation to a Jabalia would cost $1 million.Renting space would cost $500,000 per year.
• Moving to a new building in Rafah would cost $200,000, andrenting the new building’s space would cost $650,000 per year.
• The company can cancel the rent at any time.
• The company will build its own building in five years, if itsurvives.
• Assume all other costs and revenues are the same no matterwhere the company is located.

WHAT COULD THE COMPANYDO?