Problem 1. (50 points) A large apartment complex for low-income renters is being considered. The conventional steel construction cost is xo, and an innovative scheme of pushur" construction costs less. There is uncertainty in the latter, untried, system of construction. Assume that the estimate of the pushur cost is between 0.46xo and 1.14xo. As the technical representative of an association representing the steel industry, you should decide whether your industry should underwrite the pushur project by guaranteeing that it will pay any cost in excess of 1.10xo. Your industry gains nothing if the pushup project is not underwritten, but gains information on a potentially profitable new development if the pushur project is underwritten. Assume that this benefit to the industry is judged to be worth 0.02xo (independently of the final cost) plus an amount which decreases linearly from 0.05xo at 40 percent of conventional construction cost to zero at the cost of conventional construction xo... (a) Construct a decision tree involving all possible actions that the developer can take, all possible states of nature, and the associated consequences... (b) Analyze the decision tree. In other words, what is the best action?.. Problem 1. (50 points) A large apartment complex for low-income renters is being considered. The conventional steel construction cost is xo, and an innovative scheme of pushur" construction costs less. There is uncertainty in the latter, untried, system of construction. Assume that the estimate of the pushur cost is between 0.46xo and 1.14xo. As the technical representative of an association representing the steel industry, you should decide whether your industry should underwrite the pushur project by guaranteeing that it will pay any cost in excess of 1.10xo. Your industry gains nothing if the pushup project is not underwritten, but gains information on a potentially profitable new development if the pushur project is underwritten. Assume that this benefit to the industry is judged to be worth 0.02xo (independently of the final cost) plus an amount which decreases linearly from 0.05xo at 40 percent of conventional construction cost to zero at the cost of conventional construction xo... (a) Construct a decision tree involving all possible actions that the developer can take, all possible states of nature, and the associated consequences... (b) Analyze the decision tree. In other words, what is the best action