PRACTICE 4 DMUR You are considering two investment projects each having the same cost. Each project is facing the following events, probabilities and net profits: ALTERNATIVES: EVENTS: NET PROFITS: PROBABILITIE ai: Newspaper ei 4000 6000 9000 25 .50 .25 a2: Pamphlet e1 e2 e3 3000 7000 8000 30 50 20 1. Construct a decision tree and show which project you would chose by using the expected value method (x)? 2. Calculate the coefficient of variation (cov) of each project, and determine which one should you chose accordingly? 3. Use the Z-table, and show the likelihood that Project and Project 2 will yield a net profit between S7000 and $9000. 4. Assume that the first investment project will cost you $1000 less than the second one. change your decision, if at all. Show how that would 5. Assuming that you cannot obtain objective probabilities, solve the problem from the point of view of (1) maximax (optimism); (2) maximin (pessimism); (3) realism = .55; and, (4) minimization of regrets. Do you see a pattern? If you do, what project should you chose and why