Develop new solvent that would work at all conditions

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Reference no: EM131578582

The research and development manager is trying to decide whether or not to develop a new solvent that would work at all conditions. It is thought that the solvent project may be a major success with an estimated value of $1,500,000, a moderate success with an estimated value of $800,000 since it can be sold to another company to help with its current project, or a total failure. If the project is a failure, it will cost the company $700,000. Based on the subjective judgment of the manager, the following probabilities are assigned to the three possibilities.

P (major success) = 0.20

P (moderate success) = 0.40

P (failure) = 0.40

a) Support your final decision by finding the largest EMV?

b) draw the decision tree and place all numbers in the correct place?

Reference no: EM131578582

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