Question: Problem 4 : Risk Assessment in Construction Scenario: A construction company faces a decision on whether to proceed with a project. Proceed: Cost: $ 5

Problem 4: Risk Assessment in Construction
Scenario: A construction company faces a decision on whether to proceed with a project.
Proceed: Cost: $500,000; Profit: $1,000,000 with a 50% probability; Loss: $200,000 with a 50% probability.
Abandon: No cost, no return.
Task: Build a decision tree and calculate the EMV for proceeding versus abandoning the project. What should the company do?

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