A company is planning to develop a new drug and has to make a series of decisions. Since they already signed contracts to provide their drug, stopping the development would cost $200,000 in fines. However, if they were to continue the development, the production costs are expected to be $575,000. If the company continues with the development, they will have to conduct clinical trials. There is only a 35% chance the drug is successful in these trials. If the trials are successful, the company will have to seek FDA approval or stop development at this point. If they seek approval, it will cost them $30,000. There is a 65% chance the FDA will approve the drug. Finally, if FDA approves the drug, there are various market potentials for the drugs demand. There is a 65% chance the market is large with an expected revenue of $5,985,000, a 25% chance the market is moderately sized with an expected revenue of $3,125,000, and a 10% chance the market is small with an expected revenue of $1,795,000. Please build a decision tree using SilverDecisions software to determine what the company should do.

Questions:

1. Based on your solution, what is the payoff (final value) associated with not getting an FDA approval?
2. Based on your solution, what is the expected monetary value of the event node that relates to going through clinical trials?
3. Based on your solution, what is the expected monetary value of the optimal decision strategy?