XX Inc. is considering building a new plant. His managers believe that there is a probability of 0.3 that the QR Co. will come out with a competitive product. If KW adds an assembly line for the product and QR Co. does not follow with a competitive product, KW’s expected profit is $45 000; if KW adds an assembly line and QR follows suit, KW still expects $11,000 profit. If KW adds a new plant addition and QR does not produce a competitive product, KW expects a profit of $600 000; if QR does compete for this market, KW expects a loss of $95, 000. 

a. Draw the decision tree 

b. Determine the EMV of each decision 

c. Choose the best choice

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