A) Draw a decision tree whether to build a high or low capacity expansion (or not expand) Show calculations and reasoning.

B) Draw a decision tree and advise the optimal strategy.

Numbers are provided in image. Using excel, please. Thanks!

Gertrude Guanaco is considering expanding her business. She can either expand with a new high capacity production line, or she can expand with a lower capacity line. Payoffs depend on whether or not the product is liked. Costs and payoffs are shown in the table below. Equipment cost large Equipment cost small 450000 250000 Payoff if not liked 250000 230000 Payoff if liked 650000 350000 The probabilities of the product not being liked and being liked are 0.4 and 0.6 respectively. a. Draw up a decision tree for Gertrude and advise her whether to build a high or low capacity expansion (or not expand at all). Show all supporting calculations and reasoning. The equipment supplier has offered Gertrude a deal whereby she can pay $50,000 to have a buy-back option. Gertrude would pay for this option at the beginning then she would have the option of selling the equipment back to the supplier for 90% of the purchase price within the first year. Should she decide to exercise the buy-back option she would only get 10% of the benefits due to the short period that the line is run. E.g. Let's say that she decides to build a large factory and pay for the buy-back option. She would pay a total of $450,000 + $50,000. Let us further say that the product is not liked. She can exercise the option and sell the equipment back to the supplier for 90% of $450,000. By the time she sells the equipment back she would have scored by 10% of $250,000. b. Draw up a decision tree for Gertrude and advise her on her optimal strategy