SECTION B (25 Marks) INSTRUCTION: Answer COMPULSORY QUESTION. Write your response in the ANSWER BOOKLET that is provided. Question 1 (Compulsory) A building supply store is considering expanding its capacity to meet a growing demand for its products. The alternatives are to build a new store at a site nearby, expand the old one, or do nothing. Here are the regional economic outlooks: a 60% chance that the economy will remain unchanged, a 20% probability of an upturn, and a 20% chance of an economic downturn. The following estimates of annual returns have been provided: Stable market ($M) Market downturn (SM) Market upturn ($M) 1.9 1.5 0.5 Build new store Expand old store Do nothing 0.3 0.5 0 -0.5 -0.3 -0.1 Assume the goal is to maximize expected profit. a) Set up a decision-tree for this problem (10 Marks) b) What are the returns facing the company with this optimal decision? (10 Marks) c) What should the company do