Please assist with Risk analysis and managment question

QUESTION 1 Risk Management Decision Making CLO 5 / Risk Financing CLO 4 (20 Marks)

1. A pizza restaurant is deciding among three options:

• Option 1: to open a second restaurant at a cost of $75,000.

Doing so will have an 80% change of success which will earn $122,000.

Failure will result in earnings of $30,000.

• Option 2: to add a takeaway and delivery service to their existing restaurant at a cost of $16,000.

Doing so will have a 50% change of success which will earn $80,000.

Failure will result in a loss of $10,000.

• Do nothing

Sketch a decision tree and determine which option the Pizza restaurant should choose. (10 marks)

APENDIX

\f