3. A company developed a promising product and wants to make decisions. Based on the best...

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3. A company developed a promising product and wants to make decisions. Based on the best available information, a decision tree is drawn. Payoff ($ millions) (.5) Large Market 5.0 Produce & Market (.5) Low Mkt. -1.2 Develop Product (.5) Large Market Sell Idea 3.2 (.5) Low Mkt. 0.8 Sell Idea Lease for Royalty (.5) Large Market 2.2 Company A (.5) Low Mkt. 1.2 (.5) Large Market Company B 1.9 (.5) Low Mkt. 1.3 a) Calculate expected value at every node. Show work. b) What is the optimum decision and expected value? c) What is the optimum decision and expected value if they are seeking at least $1.2M? -3- 1.1 3. A company developed a promising product and wants to make decisions. Based on the best available information, a decision tree is drawn. Payoff ($ millions) (.5) Large Market 5.0 Produce & Market (.5) Low Mkt. -1.2 Develop Product (.5) Large Market Sell Idea 3.2 (.5) Low Mkt. 0.8 Sell Idea Lease for Royalty (.5) Large Market 2.2 Company A (.5) Low Mkt. 1.2 (.5) Large Market Company B 1.9 (.5) Low Mkt. 1.3 a) Calculate expected value at every node. Show work. b) What is the optimum decision and expected value? c) What is the optimum decision and expected value if they are seeking at least $1.2M? -3- 1.1