He should counteroffer $5 billion.Here is a breakdown of the expected value of each decision alternative:Accept the $2 billion settlement:

Expected value = $2 billion

Counteroffer $5 billion:

Expected value =($10.3 billion 0.17) + ($4 billion 0.5)+($3.5billion0.33) =$4.77 billion

Turn down the $2 billion settlement and let the case go to court:

Expected value =($10.3 billion 0.1) + ($4 billion 0.5) +($00.4) =$4.3 billion

As you can see, the expected value of counteroffering $5 billion is the highest, so that is the best decision for Liedke.

Here is a more detailed explanation of how the expected value of each decision alternative was calculated:Accept the $2 billion settlement:

Explanation: The expected value of accepting the $2 billion settlement is simply the amount of the settlement since there is only one possible outcome.

3. Complete the following decision tree to represent this problem scenario. Copy and paste your completed tree below