a management accountant where he worked with a data scientist to develop a model that predicts how a given loan will perform in the future based on the characteristics of the borrower available on the?peer-to-peer lending platform Mandel Credit. The decision tree pruned to depth 3 to evaluate the total payoff at a cutoff value of

0.25 and a cutoff value of0.50.

Fill in the payoff matrix.?(Enter a loss amount with a minus sign or?parentheses.)

		Payoff Matrix
		Predicted Outcomes
		Default	Repay
		(Do Not Invest in Loan)	(Invest in Loan)
Actual	Default
Outcomes	Repay
2. James is deciding whether to use a cutoff of 0.25 or 0.50. Complete confusion matrices using the pruned tree for each cut -off.

3.What cutoff value should james use? explain

.

Data table Actual Probability of Outcome Default Observation Income Credit Score (y) (p) (1) (2) (3) (4) (5) 2 62,000 650 (1) Default 0.99 6 $ 59,000 705 (0) Repay 0.33 $ 48,000 690 (1) Default 0.33 $ 57,000 685 (0) Repay 0.33 $ 85,000 710 (0) Repay 0.01 $ 72,000 660 (0) Repay 0.01 $ 75,000 640 (0) Repay 0.01 $ 71,000 680 (0) Repay 0.01Figure Depth 1 - . . .