CAN YOU PLEASE ANSWER THESE QUESTIONS AS EXPLICITLY AS POSSIBLE.

Southern Gas Company (SGC) is preparing to make a bid for oil and gas leasing rights in a newly opened drilling area in the Gulf of Mexico. SGC is trying to decide whether to place a high bid of $16 million or a low bid of $7 million. SGC expects to be bidding against its major competitor, Northern Gas Company (NGC) and predicts NGC will place a bid of $10 million with a probability of 0.4 or a bid of $6 million with a probability of 0.6. The company with the highest submitted bid will win the rights and will drill an exploration well at the site for a cost of $5 million. Geological data collected at the drilling site indicates a 0.15 probability of the reserves at the site being large, a 0.35 probability of being average and a 0.5 probability of being unusable. A large reserve would most likely yield a net return of $120 million after all extraction costs are paid; an average reserve would most likely yield a net return of $28 million after all extraction costs are paid.

A) Develop a decision tree for SGC for this problem.

B) What is the optimal decision for SGC according to the EMV criterion?