A factory modernization team is considering a new compressor that costs \(\$ 9,000\) and has a 6-year useful life. The compressor's salvage value at the end of its 6-year life is zero. MARR is 20 percent/year. The expected annual savings from the compressor are not known with certainty and are estimated as shown in the table below.

a. Draw a decision tree to represent this situation.

b. Using decision tree analysis, determine whether the new compressor should be purchased.

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Outcome Probability Annual Cost Savings 1 0.25 $3,500 2 0.40 $3,000 3 0.25 $2,300 4 0.10 $1,500