Based on available information, a student develops a tree. What is the optimum decision and expected value for that decision? Show work.

Payoff $($$ millions$)$

$(\mathrm{.}5)$ Large Market

$5\mathrm{.}0$

Produce &

$(\mathrm{.}5)$ Low Mkt$.$

Market

$-2\mathrm{.}0$

Develop

Sell Idea

$(\mathrm{.}5)$ Large Market

Product

$3\mathrm{.}0$

$1\mathrm{.}0$

Lease for Royalty

$(\mathrm{.}5)$ Large Market

$2\mathrm{.}2$

Sell Idea

Company A

$(\mathrm{.}5)$ Low Mkt$.$

$1\mathrm{.}2$

Company B

$(\mathrm{.}5)$ Large Market

$1\mathrm{.}9$

$(\mathrm{.}5)$ Low Mkt$.$

$1\mathrm{.}3$

$1\mathrm{.}0$

What is the optimum decision?

The optimum decision is to develop the product, produce and market, then sell the idea.

What is the EV with the optimum decision?

The expected value amounts to $2$ million.