Let’s say you own a small construction company. You need to decide whether to buy a bulldozer to add to your equipment fleet. You assume that the construction
industry could be Good, Mediocre, or Bad, and associate a dollar value for your profits with each possible state of the economy. Your profits will also depend on
whether you buy the equipment as follows: *Buy the bulldozer and the economy is good should yield a profit of $120K. *Buy the bulldozer and the economy is mediocre
should yield a profit of $80 K. *Buy the bulldozer and the economy is bad should yield a profit of -$50K. (That’s negative!) *Don’t buy the bulldozer and the
economy is good should yield a profit of $100K using your other equipment. *Don’t buy the bulldozer and the economy is mediocre should yield a profit of $75K using
your other equipment. *Don’t buy the bulldozer and the economy is bad should yield a profit of $60K using your other equipment. *The probability that there is a
“good” economy is 20%. *The probability that there is a “mediocre” economy is 55%. *The probability that there is a “bad” economy is 25%. Q-2a: Draw the decision
tree. Q-2b: What is the EMV associated with the decision to buy the bulldozer? Q-2c: What is the EMV associated with the decision not to buy the bulldozer? Q-2d:
What is the best decision