1. Modern Success- 60% Method 200,000 Product STA Buy the Patent Fail-40% Corporation 0 - 200,000 Success- 70% Don't buy the Patent Traditional Fail-30% Method Compute the EV: EV (Modern Method): 0.6 (200,000) + 0.4 (0) = 120,000- 80,000= 40,000 EV (Traditional Method): 0.7 (200,000) + 0.3 (0)= 140,000 - 60,000= 80,000 Modern Method Success- 60% - 200,000 120, 000- 80,000= Product STA 40,000 Buy the Patent Fail-40% Corporation 80,000 80,000 200,000 140, 000- Success- 70% 60,000= 80,000 Don't buy the Patent Traditional Fail-30% Method DECISION: The company should purchase the patent and Traditional Method should be used for development.2. Beverage Concession Clear-70% - 160,000-25,000 Concession Concession Rainy-30% To Bid Company 70,000-25,000 25,000-25,000 Clear-70% To not bid Hotdog -25,000-25,000 Rainy-30% Concession Compute the EV: EV (Beverage Concession): .07 (135,000) + 0.3 (45,000)= 108,000 EV (Traditional): 0.7 (0) + 0.3 (0)= 0 Beverage Concession Clear-70% -135,000 Concession 108, 000 Concession 108,000 Rainy-30% To Bid Company (0.4)= 45,000 43,200 - 0 43,200 Clear-70% To not bid Hotdog Rainy-30% Concession DECISION: The company should prepare the bid and it should be to beverage concession.USE THE DECISION TREE ANALYSIS TO SOLVE THE FOLLOWING PROBLEMS: 1. Mr. ASYAKA, the president of STA Corporation is faced with deciding whether to purchase a patent to develop a new product or not If the company purchases the patent, it should develop the product The selling price of the patent is P200000- There are two ways in developing the product: the Modern Method and the Traditional Method. It costs ?80,000 to use the Modern Method and f60,000 for the Traditional Method. The probability of success in the Modern Method is 60%, while it is 70% for the Traditional Method. If the product is successfully developed, it will give an income of P2,0 00,000. Should the company purchase the patent? lfso, what method of development should be used? 2. A Concession Company is considering to bid on the concession at the Astrodome during a championship game. It costs ?2 5,000 to prepare the bid. The company can bid for either beverage concession or hotdog concession. but not both. There is a 40% chance of either bid being accepted. The company's estimates of incomes depend on whether it is rainy or a clear day. For the beverage concession, the company estimates an income of P1 60,000 on a clear day or a loss of P7 0,0 00 on a rainy day. For the hotdog concession, the company estimates an income of 925.000 regardless of any weather conditions. During this particular time of the year, it has been observed that 70% of the day are clear. Should the company prepare the bid? If so, should it be beverage or hotdog