Show me the steps to solve after the firm has successfully...

Show me the steps to solve After the firm has successfully completed steps one and two, it discovers an alternate production process that would cost $150,000 and would lower production costs by $1,000,000 with certainty. This process, however, is a substitute for the three-step cost-saving process; they cannot be used simultaneously. Furthermore, to have this process available, the firm must spend the $150,000 before it knows if it will successfully complete step three of the three-step research project. f) Draw the decision tree faced by the firm after it has successfully completed steps one and two, including the possibility of pursuing this alternate production process

Transcript

00:01 Hello everyone here in this question from the given information we have the probability of mission success is equals to 1 divided by 20 which can be 0 .05 and the probability of failure is equals to 3 divided by 4 which will be equals to 0 .75 and probability of minor success is equals to 1 minus 0 .05 plus 0 .75 so this will be equals to 0 .2 so without collecting any information from the market research the expected value of net profit can be calculated as so let's draw a diagram further so there will be three sectors so here this is major success and this is minor success and this is failed so here it is 0 .05 and this is 0 .75 and this is 0 .75.

01:54 It is 90 ,000.

01:59 So through this the major success is 0 .05.

02:04 Then this will be 50 lakhs dollars.

02:11 If it is minus success, then it is 10 lakh dollars and if it is failure, there will be $2 ,000 .50 ,000.

02:28 So the expected net process, then it is $10 ,000.

02:30 Profit will be equal to 0 .05 multiplied with 50 lakhs plus 0 .2 multiplied with 10 lakhs plus 0 .75 multiplied with 2 lakhs minus 90 lakhs.

03:16 Sorry, 9 lakhs.

03:20 Here it is 9 lakhs.

03:23 So now by simplifying this we will get the equation as dollars of 6 lakhs 37 ,500 minus 9 lakhs so this will give us the answer as minus 2 lakhs 62 ,500 dollars so now we will make the decision from the pre -conditionering that the company decides to collect information from the market research flow so we have to assume that the market research theorem answered the information mentioned in the l form which is 100ks will or looks poorly with the population mentioned in the population mentioned in the problem so for that we will die we will put it on a diagram so the diagram will come as like this so this is major success and and this will be minor success...

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