Draw a decision tree for problem and expected monetary value

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Mr. John SpringBreak, COO of SpringBreak Inc., is quite concerned about the recent deterioration of a section of the roof on a building that houses his firm's computer operations. According to his assistant there are three options which merit consideration: A, B, and C. Moreover, there are three possible future conditions that must be included in the analysis: I, which has a probability of occurrence of .4; II, which has a probability of .4; and 111, which has probability of.2. If condition I materializes, A will cost $12,000, B will cost $20,000, and C will cost $16,000. If condition II materializes, the costs will be $15,000 for A, $18,000 for B, and $14,000 for C. If condition III materializes, the costs will be $10,000 for A, $15,000 for B, and $19,000 for C. Draw a decision tree for this problem and use expected monetary value, which alternative should be chosen?

Reference no: EM131481370

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