How will a decision tree help the taking of the decision? 2. More than one decision - a more complex decision tree In the diagram below, treat the section of the tree following each decision point as a separate mini decision tree. In this case there are three distinct diagrams with decision points A, B and C as the three starting points. The net expected value at the decision point B and C then become the outcomes of choice nodes 1 and 2. 1. Using the decision shown above, calculate which option should be selected on purely financial grounds. Show all your calculations to support your answer. 2. Analyze the advantages and disadvantages of using decision trees.

2. More than one decision - a more complex decision tree In the diagram below, treat the section of the tree following each decision point as a separate mini decision tree. In this case there are three distinct diagrams with decision points A,B and C as the three starting points. The net expected value at the decision point B and C then become the outcomes of choice nodes 1 and 2 . 1. Using the decision shown above, calculate which option should be selected on purely financial grounds. Show all your calculations to support your answer. 2. Analyze the advantages and disadvantages of using decision trees: Outcome 24 (0) B (0) 0.6 1 (6) (10) 0.4 0.7 40 1 6) 3 A 18 (5) 0.5 C (0) 2 (8) 0.5 0.2 30 60 30