Reference no: EM13579936

A businessman has two independent investments A and B available to him, but he lacks the capital to undertake both of them simultaneously. He can choose to take A first and then stop, or if A is successful then take B, or vice versa. The probability of success on A is 0.7 while for B it is 0.4. Both investments require an initial capital outlay of $2000 and both return nothing if the venture is unsuccessful. Successful completion of A will return $3000 (over cost), while successful completion of B will return $5000 (over cost). Prepare a report, with the aid of a decision tree, advising the investor of the best course of action.