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Question 5.SP.4: Using the probabilities of a new bridge and .40 for new brid...

Using the probabilities of a new bridge and .40 for new bridge

a. Compute the expected value of each alternative in the payoff table, and identify the alternative that would be selected under the expected – value approach.

b. Construct a decision tree for the problem showing expected values.

New Bridge Built No New Bridge
Alternative capacity A 1 14
for new store B 2 10
C 4 6

where A= small, B = medium, and C= large

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