Question
1- A car manufacturer can invest in two factories: A, and B. These factories produce 75%, and 25% respectively of a particular car. Seventy percent
1- A car manufacturer can invest in two factories: A, and B. These factories produce 75%, and 25% respectively of a particular car. Seventy percent of the cars produced in factory A are SUV cars, and 40% of those produced in factory B are SUV cars. The rest of the manufactured cars are Sedan cars. Manufacturing A needs a $40 Million investment, while manufacturing B needs a $30 Million investment. If gas becomes expensive, SUV cars will be sold at $60K. If gas is not expensive, SUV cars will be sold at $80K. If gas becomes expensive, Sedan cars will be sold at $50k. If gas is not expensive, Sedan cars will be sold at $40K. There is a 40% chance for gas to become expensive. The total number of cars produced by these two factories (put together) in 5 years would be 10,000. Based on a five years trajectory, use a decision tree to decide which factory to invest in.
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