1. For this deession tree question all the moon is about costs, so when comparing the expected net prestal, you are looking for the dessions with the lowest cost Also assume all values are already in prevent al terms (no descountmg requured) A forest company s deciding on whether or not to comply with government regulatsoms regarding harvesting practices. The cost of compliance is $100.000 The cost of non complace wolves incertainty The firm will either be caught or not haght. There is a 72% chance of not being caught in wluch case the firmaveds all costs. However there is a 28% chance that the firm will be caught. If the firm n caught the fine will be either small or large. There is a 20% chance that the fine will be small. Otherwise the fine will be large. If the fine is small the firm will pay the fine of $200,000. If however, the fine is large, then the firm has a decision to make. It must decide whether to just pay the fine of $400,000 or fight it in cont. If the firm decides to fight the fine, lawyer costs are $50,000 regardless of the outcome. In court there is a 45% chance that the firm will have to pay the $600.000 fine there is a 35% chance that the firm will have to pay a $200,000 fine and a 20% chance that the firm will not have to pay a fine at all Calculate the expected present value of the cost of non compliance Should the firm comply with the regulation? Show your decision tree. 1. For this deession tree question all the moon is about costs, so when comparing the expected net prestal, you are looking for the dessions with the lowest cost Also assume all values are already in prevent al terms (no descountmg requured) A forest company s deciding on whether or not to comply with government regulatsoms regarding harvesting practices. The cost of compliance is $100.000 The cost of non complace wolves incertainty The firm will either be caught or not haght. There is a 72% chance of not being caught in wluch case the firmaveds all costs. However there is a 28% chance that the firm will be caught. If the firm n caught the fine will be either small or large. There is a 20% chance that the fine will be small. Otherwise the fine will be large. If the fine is small the firm will pay the fine of $200,000. If however, the fine is large, then the firm has a decision to make. It must decide whether to just pay the fine of $400,000 or fight it in cont. If the firm decides to fight the fine, lawyer costs are $50,000 regardless of the outcome. In court there is a 45% chance that the firm will have to pay the $600.000 fine there is a 35% chance that the firm will have to pay a $200,000 fine and a 20% chance that the firm will not have to pay a fine at all Calculate the expected present value of the cost of non compliance Should the firm comply with the regulation? Show your decision tree