Illustrate and explain your decision tree analysis.

7. The market analyst of Colgate is planning to launch a new product. He can either launch

Colgate with cooling crystals, Colgate with fluoride, or do nothing. If he launches Colgate

with cooling crystals, the company will gain P660,000 if the market is successful or incur

a loss of 220,000 if the market is a failure. If he launches Colgate with fluoride, the

company will gain 2200,000 if the market is successful or incur a loss of 88,000 if the

market is a failure. If the analyst does not launch anything, the company will not gain

anything whether the market is a success or a failure. The probability that the market is

successful is 35% and that the market is failure is 65%.

Help the market analyst decide on which to launch. How much profit or loss will the

company expect?

8. Mighty has to decide whether to resign or not form his present position and apply for a

job offering him twice his present monthly salary, that is, if he passes the qualifying test.

At present, he receives P17,000 monthly compensation. The offer in the other company

has a condition that he will be allowed to take the qualifying test unless he resigns from

his present post. If he passes the qualifying test, he will immediately be taken in and have

a monthly pay of 34,000. If he fails, he will remain jobless. He feels that his chance of

passing is 80%?

Suppose he decides to base his decision on the expected value, should he resign from

his post or not?