Sketching the complete decision tree

Assignment Help Basic Statistics

Reference no: EM13100936

The managers of NOVA Constructions are considering to buy a patent of a latest mixing plant and there objective is to maximize profit. ALLCO Engineers designed and developed the new Robotic Mixing Plant and offered its patent to NOVA. To keep it simple if NOVA accept this deal, the average net contribution to profit during product life cycle (estimated 5 years) of the new Robotic Electrical mixing Plant is estimated to be $154 million, $61.20 million and -$65.42 million for high, moderate and low market condition respectively.

Marketing department of NOVA constructions also estimated that there is a 16% probability that market will be high, 62% probability that the market will be moderate. If they didn't go for the patent deal and invest same amount of money what they have to pay for patent another alternate can contribute 28.04 million profit for the same period (i.e. estimated 5 years)

Draw the complete decision tree and determine whether the product should be launched or not.

Reference no: EM13100936

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