What is the expected value of the decision Buy Machine

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Reference no: EM132836364

Problem - Suppose you want to use a decision tree to decide whether to buy Machine A or Machine B. The right choice depends on the level of demand, which may be high or low. The probabilities of having high and low levels of demand are 0.6 and 0.4, respectively. The payoff table is as follows:

	High Demand	Low Demand
Buy Machine A	$21,500	$5,412
Buy Machine B	$10,532	$8,520

Required - What is the expected value of the decision "Buy Machine A" in dollar amount?

Reference no: EM132836364

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