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 80. The after tax NPV of the benefits from purchasing two machines together is $70,000 if demand is low and $180,000 if demand is high If one machine is purchased and demand is low, the NPV is $100,000. W demand is high, the manager has three options: (1) doing nothing, which has an NPV of $100,000, (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 Q 100 100 Buy 1 machine 100 Do nothing Subcontract Buy 2 70 machines 140 CP Low demand 0.20 High demand 0.80 Low demand 0.20 High demand 0.80 140 D Buy 2 machines 1 Buy 1 machine Low demand 100 Do nothing 0.80 High demand Subcontract 0.20 Buy 2 Low demand 70 machines 0.80 High demand 180 020 130 130 Buy 2 machines 180 Help me solve this View an example Get more help Clear all Chock answer search Raining now 180 machine 0.80 High demand 0.20 - 180 . OD Low demand 0.20 100 Buy 1 Do nothing machine 100 100 Buy 1 machine 140 L High demand 0.80 140 Low demand -70 Do nothing High demand Subcontract Buy 2 Low demand 100 machines High demand 180 Subcontract Buy 2 machines 70 Buy 2 machines 130 130 Low demand 0.20 Buy 2 machines 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 answer search To Raining now