Darwin uses decision tree analysis in order to evaluate potential projects. The company has been looking at the launch of a new product which it believes has a 70 per cent probability of success. The company is, however, considering undertaking an advertising campaign costing £50,000, which would increase the probability of success to 95 per cent.
If successful, the product would generate income of £200,000, otherwise £70,000 would be received.
What is the maximum that the company would be prepared to pay for the advertising?
(a) £32,500
(b) £29,000
(c) £17,500
(d) £50,000