• • • A.27 A construction company wants to decide on whether to bid for a new project or not. If the company decides to bid, there is a KWD 10,000 cost associated with preparing the preliminary proposal.

The probability that the company will be shortlisted for the project is 60%. If the company is shortlisted for the project, it must submit a final proposal with its bid that will cost another KWD 5,000 or simply withdraw. The company believes that there will a 50% chance that it will win the bid if the bid is KWD 120,000, while there is an 80% chance that it will win if the bid is KWD 90,000. The company also estimated the cost of the project to be KWD 60,000.

Use decision trees to help the company decide on the best alternative.