Question

TreasureHunters' International, Inc. (THI) is a monopolist and has discovered a new sunken treasure ship. The sunken treasure ship contains a chest of gold coins.

The firm has two options:

1. Spend $110 to bring the chest of gold coins to the surface, and then sell the coins

2. Leave the chest in the wreck and maintain secrecy about the location and existence of the wreck

Use quantitative and qualitative analysis to make decisions and predictions interpreting both options.

Answer 1

Option 1 will be followed in following scenario

If the value of chest of gold coin is more than the $110 then it will be beneficial for the reasureHunters' International, Inc. to bring chest of gold coin to surface .secondly if there is a possibility that gold price in the market is going to fall in future then it is advisable to bring the chest to the surface and sell it immediately.

Option 2 will be followed in following scenario

If the value of chest of gold coin is less than the $110 then it will be beneficial for the reasureHunters' International, Inc. to  Leave the chest in the wreck and maintain secrecy about the location and existence of the wreck. Secondly if there is a possibility that gold price in the market is going to rise in future then it is advisable to leave the chest in the wreck and maintain secrecy about the location and existence of the wreck at this point of time and bring it to the surface when then gold price in market rises .

The decision also depends upon the level of risk involved in bringing treasure to surface and rules & regulation of government on this.