4 (a) You are the author of what could potentially be a successful novel. You have the option of either self publishing (that is publishing the novel yourself) or publishing through a company. There is a 30% chance that the novel will be a success. If the novel is a success, it will sell 250,000 copies; but if it is a failure, it will sell only 25,000 copies. The company is offering you $10,000 for signing a contract with them, plus they will pay you $0.50 per copy sold. If you publish the novel yourself, you will incur an initial setup cost of $80,000, but each copy sold will make you $1.50 profit. (i) Draw and evaluate a decision tree for the decision of whether to self publish your novel or accept the company's offer. What is the best decision and the expected return? (ii) What is the maximum you would pay for any information about whether the novel will be a success or a failure? (b) Suppose that you are considering using a local literary critic concerning the potential success of the novel. The critic advertises (on their website) that from past experience: when a novel is successful, the critic will love the novel 60% of the time and think that the novel is ok 40% of the time; and when the novel is a failure, the critic will love the novel only 10% of the time and think that the novel is ok 90% of the time. (i) Assuming that the literary critic should be consulted, draw and evaluate a decision tree to determine what subsequent actions would be taken. (ii) Calculate the EVSI and explain clearly what it means in this case. dtr104b