Question: Can you please clarify why the answer is not a1 5. Given the following decision tree for a two-stage (decision) project to enter a joint

Can you please clarify why the answer is not a1

Can you please clarify why the answer is not a1

Can you please clarify why the answer is not a1

5. Given the following decision tree for a two-stage (decision) project to enter a joint venture, find the best alternatives (among a, -a, in the figure) and their expected values. The outcomes shown are revenues and the investment expenses are in parentheses. Node 4 represents the situation where alternative a, was chosen, and then the top outcome with a 70 percent probability occurred; note that there is no choice of alternative if the 30 percent probability outcome occurred. Similarly with Node 5. 3,000 0.7 4 a4 1,000 2 (500) 0.3 2,000 0.2 1 500 0.4 0.3 5 1,000 0.5 3,500 , (1,000) 3 a5 3,000 0.6 6 6 4,000

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