Decision Tree Worksheet
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This worksheet provides information for a company to decide whether to invest in new stores, old stores, or do nothing. It lists the costs, probabilities of a strong or weak economy, and expected returns for each option. Students are asked to design a decision tree and assess which option is most convenient based on the information given.
Decision Tree Worksheet
- 1. UNIDAD EDUCATIVA BILINGUE NUEVO MUNDO WORKSHEET FOR ING 01 VER 15 04 11 Teacher: Alex Arancibia/Verónica Icaza Name: …………………………… Course: 2nd Bach Section:………………………… Subject: Business & Management Date: __ July, 2012 Activity: Decision trees A company wants to know which of the following three decisions it should make. Based on the information provided, design a decision tree and assess which is the most convenient decision. Decision Probability of a strong economy Probability of a strong economy Cost Euros Points (80% chance) and the expected value (20% chance) and the expected value Invest in New If the economy is strong 3 Million return If the economy is weak 1 million return 2 Million stores (probability of a strong economy is 80%) (probability of a weak economy is 20%) Invest in Old If the economy is strong 1Million return If the economy is weak 200,000 return 150,000 stores (probability of a strong economy is 80%) (probability of a weak economy is 20%) If the economy is strong 200,000 return If the economy is weak 75,000 return Do nothing None (probability of a strong economy is 80%) (probability of a weak economy is 20%) Approved by: ________________________ Date: 14jul2012 # of copies: ____ Pages: 1/__