excel

Problem 2: Decision Tree (10 points) Senior management at Forever Young has identified a source of uncertainty not present in their initial assessment. They have come to the conclusion that price in addition to demand and exchange rate are sources of uncertainty. The initial price per unit is $20, but has a 70% probability of increasing by 10% and a 30% probability of decreasing by 10% each year. The initial demand is 1000 units, but has a 50% probability of increasing by 20% and a 50% probability of decreasing by 20%. Lastly, the current exchange rate is 6.5 yuan/dollar. The yuan can strengthen by 10% relative to the dollar with a probability of 70% or weaken by 10% with a probability of 30%. As a rising star in the data analytics team, you volunteer to present a decision tree that captures the sources of uncertainty over the next three years at the next group meeting. Build a decision tree that captures the three sources of uncertainty for the next two years. Be sure to include values and associated probabilities. Note: the current period counts as year 1