Kholodny plc installs ventilation systems At present its order book is rather thin and it has no work for the forthcoming period It has been offered two contracts abroad, of which it can take only one The first contract is to install a ventilation system in the Presidential Palace of the republic of Sloochai The contract should earn the company a profit of 8m but the country is unstable and there is a 70 probability that the president will be overthrown before the work is finished If the president is overthrown his opponents are not expected to pay for the work and the company would face a loss of 0 5m The second contract is to install a ventilation system in an administration building in the republic of Palooka The company can expect a profit of 6m from this contract unless the local currency is devalued during the completion of the project in which case the profit will fall to 3m Financial experts put the probability of devaluation at 0 5 (a) Construct a decision tree to portray the situation the company faces

Question: Kholodny plc installs ventilation systems. At present its order book is rather thin and it has no work for the forthcoming period. It has been

Kholodny plc installs ventilation systems. At present its order book is rather thin and it has no work for the forthcoming period. It has been offered two contracts abroad, of which it can take only one. The first contract is to install a ventilation system in the Presidential Palace of the republic of Sloochai. The contract should earn the company a profit of £8m but the country is unstable and there is a 70% probability that the president will be overthrown before the work is finished. If the president is overthrown his opponents are not expected to pay for the work and the company would face a loss of £0.5m.The second contract is to install a ventilation system in an administration building in the republic of Palooka. The company can expect a profit of £6m from this contract unless the local currency is devalued during the completion of the project in which case the profit will fall to £3m. Financial experts put the probability of devaluation at 0.5.
(a) Construct a decision tree to portray the situation the company faces

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