Problem:
Sue Reynolds has to decide if she should get information (at cost of $300,000) to invest in retail store. if she gets the information, there is a 0.45 probability that the information will be favorable and a 0.55 probability that the information will not be favorable.If the information is favorable, there is a 0.9 probability that the store will be a success. If the information is not favorable the probability of a successful store is only 0.2 without any information,sue estimates that the probability of a successful store will be 0.6 A successful store will give a return of $120,000. if the store is built but is not successful, Sue will see a loss of $90,000. Of course, she could always decide not to build the retail store.
1) Construct a decision tree.
2) What do you recommend?