6. Decision Tree (Assignment package): New Case Study for Texaco versus Pennzoil  Texaco offers $3.5B and Pennzoil to decide between: accept $3.5B, counteroffer with $5B, and refuse to go to court.  In case of Pennzoil counteroffer with $5B, then o There is 17% probability that Texaco accepts the counteroffer. o There is 50% probability that Texaco refuses the counteroffer to go to court. o There is 33% probability that Texaco counteroffers with $4B.  If they go to court, there is o 25% probability that Pennzoil will win a large reward of $10.3B. o 50% probability that Pennzoil will win a medium reward of $2.5B. o 25% probability that Pennzoil will win no reward. 

Questions:  

Draw the decision tree.  Clearly show the decision nodes with the correct symbol.  Clearly show the chance nodes with the correct symbol.  All the calculation steps need to be shown.  Provide the final decision and provide the reason why?

Answer rating: 100% (QA)

To draw the decision tree for the Texaco versus Pennzoil case study we need to consider the various ... View the full answer