Answer only B.

A manager is trying to decide whether to buy one machine or two. If only one machine is purchased and demand proves to be excessive, the second machine can be purchased later Some sales would be lost, however, because the lead time for delivery of this type of machine is six months. In addition, the cost per machine will be lower if both machines are purchased at the same time. The probability of low demand is estimated to be 0.20 and that of high demand to be 0:30. The after-tax NPV of the benefits from purchasing two machines together is $70,000 if demand is low and 5180,000 if demand is high If one machine is purchased and demand is low, the NPV is $120,000. If demand is high, the manager has three options: (1) doing nothing, which has an NPV of $120,000, (2) subcontracting with an NPV of $140,000; and (3) buying the second machine, with an NPV of $130,000 a. Choose the correct decision tree for this problem. Note that each payoff is given in thousands of dollars OB DA @ Low demand -70 Do nothing Low demand 0.20 120 120 Buy 1 machine Do nothing 2 120 High demand 140 ER High demand 0.80 140 Buy 1 machine 11 Buy 2 machines Subcontract Buy 2 120 machines Subcontrad Buy 2 machines Low demand 130 130 Buy 2 machines High demand 180 Low demand 0.20 70 Help me solve this View an example Get more help Clear all Check an E o O Raining now machines machines Low demand 0.20 70 High demand 180 . 120 Do nothing Subcontract Buy 2 machine 120 Buy 1 machine 120 140 140 C Low demand 0.80 High demand 0.20 Low demand 0 BD High demand 0.20 Buy 2 Low demand 120 Do nothing 0.20 High demand Subcontract 0.80 Low demand Buy 2 -70 machines 0.20 High demand 180 0.80 130 130 70 machines Buy 1 machine Buy 2 machines 180 b. What is the best decision and what is its expected payoff? Best decision is to buy machine(s) and its expected payoff is (Enter your responses as integers) Help me solve this View an example Get more help Clear all Check in we Raining now search