Decision tree analysis, Tom is suing the producer of his

Decision tree analysis

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Reference no: EM1377586

Tom is suing the producer of his car for $3.5 million because of a defect that he believes caused him to have an accident. If Tom decides not to sue the producer, the producer would offer him a settlement of $600,000. If Tom decides to proceed with the lawsuit, his attorney has advised him that he has 50% chance of winning his case. If he loses, he will incur attorney's fees of $75,000. If Tom wins, his attorney believes that there is an 80% chance he could receive the full settlement, in which case Tom would realize a $2 million after his attorney takes her cut, and a 20% chance that the jury will award him a lesser amount of $1 million, of which Tom would get $500,000. Using a decision tree, decide if Tom should proceed with his lawsuit against the producer.

Reference no: EM1377586

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