a) The development of a small driving range for golfers of all levels has long been a wish of Jeremy Jenkins. He believes there is a 50/50 chance that the driving range will succeed or fail. A friend of Jeremy's suggested that he should conduct a community survey to get a better idea of the demand for such a facility. Such surveys are not perfect and will have some false negatives and false positives. A false negative occurs when the survey provides a negative signal for a company that will be successful. A false positive occurs when the survey provides a positive signal for a company that will not actually be successful. Assume that the survey will have a false negative rate of x and a false positive rate of 0.30. What should the value of x be to ensure that there is a 0.70 probability that the range will actually be successful if the survey provides a positive signal?

b) For this question, assume that x = 0.20. (The false positive rate is still 0.30.) The cost of the survey is $5000. If the driving range is successful, the net present value of the facility will be $200,000 (this figure does not include the cost of the survey). If unsuccessful, the net present value of the facility will be -$80,000 (this figure does not include the cost of the survey). Draw a decision tree and recommend the course of action for Jeremy that will maximize his expected net present value. Calculate the EVSI and EVPI for this decision situation.