What is the probability that he will win the reduced amount

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Reference no: EM131039441

Samuel Cartwright is suing over a workmanship defect in a data backup system that cost him 3 years of client data. He is suing for $1 million, and the manufacturer is offering him an out-of-court settlement of $450,000, of which Samuel will receive $400,000. Samuel's lawyer advises him that cases like his do not tend to do well if they reach court, but that the company offered to settle to protect its reputation. If he goes to court, he has only a 30% chance of winning anything. If he does win, he has a 65% chance to win the full award, and a 35% chance to win a reduced award of $650,000. If he goes to court and loses, he will incur $50,000 in lawyer's fees and court costs. Create a decision tree to represent this situation. If he goes to court, what is the probability that he will win the full amount? What is the probability that he will win the reduced amount? What is the expected value of going to court? What should Samuel do?

Reference no: EM131039441

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What is the probability that he will win the reduced amount : Samuel Cartwright is suing over a workmanship defect in a data backup system that cost him 3 years of client data. He is suing for $1 million, and the manufacturer is offering him an out-of-court settlement of $450,000, of which Samuel will receive $..

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