Profit$($s $1,000$ s$)$

$($a$)$ Verify the company's profit projections shown at the ending branches of the decision tree by calculating the payoffs of $$2,620,000$ and $$620,000$ for first two outcomes, the outcomes extending from chance node $8.$

$\backslash$table$[[$Outcome $1,($$ in $1,000$s$)],[$Bid$,],[$Contract$,],[$Market research,$],[$High demand,$],[$Total$,]]$

$\backslash$table$[[$Outcome $2,($$ in $1,000$s$)],[$Bid$,],[$Contract$,],[$Market research,$],[$Moderate demand,$],[$Total$,]]$

$($b$)$ What is the optimal decision strategy for the company?

Bid on the contract. Do the market research. If the forecast is high, build the complex. If the forecast is moderate, sell the rights in the project to another developer.

Do not bid on the contract.

Bid on the contract. Do the market research. If the forecast is kigh, sell the rights in the project to another developer. If the forecast is moderate, build the complex.

Bid on the contrat Do not

expected profit $($in $$)$ for this project?

$$