Given the following sequential decision tree, determine which is the better investment, A or B.

Read problem description. Compute the expected value (payoff) of each node.

Question 1, the expected value (payoff) of node 7 is___________?

Question 2, the expected value (payoff) of node 4 is___________?

Question 3, the expected value (payoff) of node 5 is___________?

Question 4, the expected value (payoff) of node 6 is___________?

Question 5, the expected value (payoff) of node 3 is___________?

Question 6, the expected value (payoff) of node 1 is___________?

Question 7, based on the calculated expected value, investment option A is the one to choose.

A.True

B.False

30 N Given the following sequential decision tree, determine which is the optimal investment, A or B: .40 $300,000 (-$20,000) .60 $80,000 $45,000 Investment A .70 $75,000 (-$70,000) 20 $200,000 (-$17,000) .80 $70,000 .15 $60,000 $105,000 (-$9,000) Investment B .55 .65 $40,000 (-$50,000) $55,000 $80,000 5 .35