Complete the problem using the example on page 183. Example 3, Figure 5.13 or (5.12 13th ed). This is a decision tree analysis to choose between two options.

You do not have to draw the tree as illustrated in the text, but be sure to include all of your formulas. Here is an excel format that you can use. Be sure to indicate which option is best.

Show all your work.

Residents of Mill River have fond memories of ice skating at a local park. Joe, a local artist, has captured the experience in a drawing and is hoping to reproduce it and sell framed copies to current and former residents.

He thinks that if the market is good he can sell 600 copies of the elegant version at $150 each. If the market is not good, he will sell only 300 at $100 each.

He can make a deluxe version of the same drawing instead. He feels that if the market is good he can sell 800 copies of the deluxe version at $120 each. If the market is not good, he will sell only 400 copies at $90 each.

Production costs will be approximately $25,000 for the elegant version and $20,000 for the deluxe version. He can also choose to do nothing. There is a 60% probability that the market is good and 40% probability that the market is not good. Do an EMV analysis and make a recommendation based on your analysis what Joe should do.