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A company manufactures a specialty pollution-sensing device for the ofithore ofi findustiy. The company is considering whether to replace it with a newer model. The

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A company manufactures a specialty pollution-sensing device for the ofithore ofi findustiy. The company is considering whether to replace it with a newer model. The firm's three cholees ares 1. keep the old model 2. design a replacement device with intemal resources 3. purchase a new design The market for these devices will be cither "receptive" or "neutral" to the replacement model. The financial estimates are as follows: Keeping the old design will yield a profit of 56 million dollars. Designing the replacement internally will yield $10 million if the market is "receptive," but a $3 million loss if the market is "neutraL" Acquiring the new design from the supplier will profit S4 million under "receptive," and $1 million under "neutral." The company feels that the market has a 70 percent chance of being "receptive" and a 30 percent chance of being "neutral." Draw the appropriate decision tree. Calculate the expected monetary value for all courses of action. What action yields the highest expected value? (15 points)

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