Question

abandon the product. The details are set out below failure (probaty0.3). anticipated to be A firm has developed a new product X. They can either test the market or Test market cost S50000, likely outcomes are favourable (probability = 0.7) or If favourable they could either abandon or produce it when de mand is Low Demand Medium Demand High Demand If the test market indicates failure the project would be abandoned Abandonment at any stage results in a gain of $30000 from the special Probability 0.25 Probability0.6 Probability 0.15 Loss $100000 Profit $150000 Profit $450000 machinery used. Required: Draw the decision tree showing the possible cases with probabilities

Answer 1

0-3 0.3 re -0:3 gar ls 30, o00 V 015 ttich 0:25 Madiuro demand dad dmand