Interactive Exercise 1: Corporate Raider A corporate raider contemplates the future of a recent acquisition. Three alternatives are being considered in two states of nature: 1. Expand a textile plant and produce for the military 2. Maintain status quo 3. Sell the plant The payoff table is below. Decision Expand Maintain Status Quo Sell now States of Nature Good Foreign Competitive Poor Foreign Competitive Conditions Conditions $ 800,000 $ 500,000 1,300,000 -150,000 320,000 320,000 E.g., Import taxes; Free Trade Agreements Embargo Interactive Exercise 1: Corporate Raider (20 MINS) a) Determine the best decision without probabilities using the 5 criteria for decision analysis under uncertainty (for Hurwicz use a = .3) b) Determine best decision with probabilities assuming .70 probability of good conditions, .30 of poor conditions. Use expected value and expected opportunity loss criteria. c) Compute expected value of perfect information. d) Develop a decision tree with expected value at the nodes. e) Given the following, P(P]g) = .70, P(N g) = .30, P(P|p) = 20, P(N|p) = .80 for (P)ositive and (N)egative reports given (g)ood or (p)oor economic conditions, determine posterior probabilities using Bayes' rule. | 1) Perform a decision tree analysis using the posterior probability obtained in part (e) to derive the strategy