Develop Product

Lease for Royalty

Sell Idea

Payoff

$

$(5)$ Large millions$)$

Market

Produce $5)$ Low

Mahket

Mkt$.$

$-3\mathrm{.}0$

Sell Idea

$(\mathrm{.}5)$ Large

$3\mathrm{.}0$

Company

ALK

Company

B

Mkt$.$

$(5)$ Large

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

Mkt$.$

$(5)$ Large

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

Mkt$.$

$1\mathrm{.}8$

$1\mathrm{.}0$

$8\mathrm{.}0$

$-1\mathrm{.}0$

$1\mathrm{.}0$

$$Calculate Expected value $($EV$)$ at every node. Show work.

$$What is the optimum decision and EV$?$

$$If your risk tolerance is SO$,$ what is the best decision and EV$?$