Jim, a retired geologist, has developed a software program for predicting the presence of oil based on geological surveys and seismic images. Jim can sell the software rights to Dundee Software for $100,000 or he can market the software himself. If he chooses to market the software himself, then his payoff will be determined by the success of the software in the marketplace. Jim has surveyed the market and has determined that there is a 15% change of having major success (with a payoff of $350,000), a 70% chance of moderate success (with a payoff of $80,000), and a 15% chance of a failure (with a cost of $11,000).

First, develop and fold back a decision tree model for this scenario, doing all calculations by hand (and calculator, if helpful), determining the optimal decision alternative. Second, determine the expected value of perfect information.