a$)$ Using the EMV Approach which course of action

should be selected?

b$)$ What is the value of the selected Decision Node

$($P$1,$ P$2,$ P$3)?$

c$)$ What is the lowest EMV?

d$)$ Which Decision Node has that value $($P$1,$P$2,$P$3)?$

Payoffs

Favorable Market $(0\mathrm{.}8)$

$$400,000$

P$1$

Large Plant

Unfavorable Market $($

$($$$120,000$

Decision

Node

Favorable Market $()$

P$2$

Unfavorable Market $()$

Favorable Market $()$

$$40,000$

Do Nothing

Small Plant

$$200,000$

P$3$

Unfavorable Market $()$