Question: 2. Based on available information, a student develops a decision tree. Payoff ($ millions) (.6) Large Market 5.0 Produce & (-4) Low Mkt. Market -5.0

2. Based on available information, a student

2. Based on available information, a student develops a decision tree. Payoff ($ millions) (.6) Large Market 5.0 Produce & (-4) Low Mkt. Market -5.0 (.6) Large Mkt. Develop Sell Idea 4.0 Product (4) Low Mkt. -1.0 Lease for Royalty (.6) Large Market 3.0 Sell Idea (.4) Low Mkt. Company A -1.0 (.6) Large Market Company B 3.5 (.4) Low Mkt. -1.5 0.7 a) Calculate expected value at every node including the first node. Show work. b) What is the optimum decision and its expected value? c) If your risk tolerance is -$1.0 million, what is the optimum decision and expected value

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