(answer Question 21 only please)

Decision Trees a 20. Draw a decision tree for the three options described in Problem 19. What should management do to achieve the highest expected payoff? 21. The owner of Pearl Automotive Dealers is trying to decide whether to expand his current facility. If he expands and customer demand turns weak, there is a chance he could lease part of his newly constructed facility to another dealer. If he doesn't expand and strong demand occurs, he could attempt to lease another facility across town. Analyze the decision tree in Figure A.8. What is the best set of decisions and the expected payoff? $2,000,000 $1,200,000 $400,000 Strong Product Demand (50%) Average Product Demand (20%) Property is Leased (20%) Expand Facility Weak Product Demand (30%) 2 Lease New Facility Property Is Not Leased (80%) $100,000 Do Not Lease New Facility $200,000 $1,800,000 Facility Weak Product Demand (30%) Property is Leased (20%) Do Not Expand Weal Strong Product Demand (50%) 3 Lease New Facility Property Is Not Leased (80%) $1,200,000 Do Not Lease New Facility $1,300,000 Average Product $900,000 $400,000