Question: Compute the expected payoffs for each alternative shown in the following decision tree. (Values in the tree are in millions. Use the same format, rounding

Compute the expected payoffs for each alternative

Compute the expected payoffs for each alternative shown in the following decision tree. (Values in the tree are in millions. Use the same format, rounding to 2 decimals, to enter your answers.) $1.0* $1.3 Do nothing Expand $1.3 $1.5 Do nothing $1.6 Build $1.8 $0.7 $1.5 $1.0 $1.6 $1.6 $1.5 $1.7 ($0.9) $1.4 $1.0 $1.0 $1.1 $0.9 $2.4 Subcontract Expand Build Small demand (4) Medium demand (.5) Large demand (.1) Small demand (4) * Net present value in millions EVsubcontract EVexpand EVbuild Thus, Medium demand (.5) Large demand (.1) Small demand (4) Medium demand (.5), Large demand (.1) Expand Do nothing Other use #1 Other use #2 Do nothing Build Do nothing Subcontract Other use #1 Other use #2 Do nothing Other use #1 Other use #2 has the highest expected payoff

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