24. Ayesha is planning to open a new restaurant on Cotham Hill and has an option of renting either small or large premises. The annual rental cost, including taxes, is 50000 for the small premises and 100000 for the large premises. There are two possible scenarios for demand, High and Low. In the Low demand scenario, Ayesha can expect to make 80000 in the first year after paying staff and suppliers, irrespective of whether she has rented small or large premises. In the High Demand scenario, she can still only make 80000 if she rented the small premises, but can make 160000 if she rented the large premises (both figures are after paying staff and suppliers). Let p denote the probability that demand for Ayesha's restaurant is High and q:=1p the probability that it is Low. (a) (30 marks) Draw the decision tree for Ayesha's problem, assuming she is riskneutral, and specify for what values of p she should rent the large premises. (b) (20 marks) If she were risk averse, how would your answer change qualitatively? Would there be a smaller or a larger set of values of p for which she would rent the large premises, or is it impossible to say? Explain your reasoning. 24. Ayesha is planning to open a new restaurant on Cotham Hill and has an option of renting either small or large premises. The annual rental cost, including taxes, is 50000 for the small premises and 100000 for the large premises. There are two possible scenarios for demand, High and Low. In the Low demand scenario, Ayesha can expect to make 80000 in the first year after paying staff and suppliers, irrespective of whether she has rented small or large premises. In the High Demand scenario, she can still only make 80000 if she rented the small premises, but can make 160000 if she rented the large premises (both figures are after paying staff and suppliers). Let p denote the probability that demand for Ayesha's restaurant is High and q:=1p the probability that it is Low. (a) (30 marks) Draw the decision tree for Ayesha's problem, assuming she is riskneutral, and specify for what values of p she should rent the large premises. (b) (20 marks) If she were risk averse, how would your answer change qualitatively? Would there be a smaller or a larger set of values of p for which she would rent the large premises, or is it impossible to say? Explain your reasoning