Question: Given the decision tree below for a two-stage (decision) project to enter a joint venture, find the best alternatives (among a1-a6 in the figure) and
Given the decision tree below for a two-stage (decision) project to enter a joint venture, find the best alternatives (among a1-a6 in the figure) and their expected values. The outcomes shown are revenues and the investment expenses are in parentheses. Node 4 represents the situation where alternative a1 was chosen, and then the top outcome with a 70% probability occurred; note that there is no choice of alternative if the 30% probability outcome occurred. Similarly with Node5.
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3,000 0.7 1,000 a1 2 (500) 0.3 2,000 0.2 0.3 1,000 0.5 3,500 500 0.4 5 a2 (1,000) 3 3,000 0.6 6 4,000
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