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Can someone explain to me how to solve this question and please show all work with a decision tree 2. Decision trees Whenever you face
Can someone explain to me how to solve this question and please show all work with a decision tree
2. Decision trees Whenever you face a problem in which you make decisions sequentially, a decision tree can simplify the decision. This questions asks you to decide when to perform maintenance on a functioning machine and when to replace a broken machine. You will need the following information When running, the machine produces S100 profit per year * The machine is running and the project has two more years to go The machine has zero salvage value. The opportunity cost of capital is 25%. . If the machine is running at the beginning of year, you can perform maintenance on it. The cost of maintenance is $20. If maintenance is performed, the machine will run for the next year with probability 0.6. If maintenance is not performed, the machine will run for the next year with probability 0.3. If the machine is not running at the beginning of the year, you can repair the machine at a cost of S40 or replace it at a cost of S150. If you repair it, the machine will run for the next year with probability 0.6. If you replace it, the machine will run for the next ycar with probability 1.0. What is the optimal maintenance and replacement program for the machineStep by Step Solution
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