What is the expected net profit from the mountain location

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Reference no: EM133331603

Assignment:

DECISION TREE

Alan has been appointed project manager for a radio station KXKVI that is planning to build a new transmitting tower. He has narrowed the sites down to two and is considering the following.

The revenue from site A Mountain would be $2 million and the revenue from Site B Open Flats $2.4 million

Site A - Mountain: Real estate cost - $ 1 million up front with a 30 % chance of an earthquake costing $700,000, 70% chance no quake and no costs and a 20% chance of sabotage from an alien being costing $350,000, 80% chance no sabaotage, no costs.

Site B - Open Flat Area: Real estate costs $700,000 up front with a 50% chance of excessive flooding costing an additional 400,000, 50% chance no flooding, no costs and a 20% chance of a fire that could destroy most of the project costing $600,000, 80% chance no fire, no costs.

Question: What is the expected net profit (or loss) from the Mountain location? Enter the full dollar amount, and if a loss use a negative sign!

Reference no: EM133331603

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