1) X= 21 You are the CEO of a company which is about to launch a new product to the market and you are risk-neutral.If successful, the present value of the payoff is estimated to be $(100,000+ 1000x) , if unsuccessful the payoff will be $(20,000+1000X). Previous experience shows that without the pre-test, there is a 40% chance that the new product will be successful. If a pre-test is conducted before the launch, the probability of success increases to 60%. The cost o the pre- test is $12000. a) (8 points) Draw the decision tree. (hint: use circles and squares when relevant, calculate expected payoffs) b) (5 points) Will you conduct the pre-test or launch directly? c) (5 points) What is the maximum amount that you will be willing to pay for the pre-test? d) (7 points) If you were a risk-averse person, how will you decide to make a pre-test or not? What criteria will you take into account?Explain in your own words. 1) X= 21 You are the CEO of a company which is about to launch a new product to the market and you are risk-neutral.If successful, the present value of the payoff is estimated to be $(100,000+ 1000x) , if unsuccessful the payoff will be $(20,000+1000X). Previous experience shows that without the pre-test, there is a 40% chance that the new product will be successful. If a pre-test is conducted before the launch, the probability of success increases to 60%. The cost o the pre- test is $12000. a) (8 points) Draw the decision tree. (hint: use circles and squares when relevant, calculate expected payoffs) b) (5 points) Will you conduct the pre-test or launch directly? c) (5 points) What is the maximum amount that you will be willing to pay for the pre-test? d) (7 points) If you were a risk-averse person, how will you decide to make a pre-test or not? What criteria will you take into account?Explain in your own words