Lethbridge is considering replacing its fleet of gasoline-powered automobiles with electric cars. The manufacturer of the electric cars claims that this municipality will experience significant cost savings over the life of the fleet if it chooses to pursue the conversion. If the manufacturer is correct, the city of Lethbridge will save about $1.5 million dollars. If the new technology employed within the electric cars is faulty, as some critics suggest, the conversion to electric cars will cost the city $850,000. A third possibility is that less serious problems will arise, and the city will break even with the conversion. A consultant hired by the city estimates that the probabilities of these three outcomes are 0.33, 0.28 and 0.39, respectively.

The city has an opportunity to implement a pilot program that would indicate the potential cost or savings resulting from a switch to electric cars before they decide to convert their fleet to electric cars. The pilot program involves renting a small number of electric cars for 3 months and running them under typical conditions. This program would cost the city $50,000 and the probabilities that the pilot program indicates savings, a loss or breaking even are 0.40, 0.20 and 0.40, respectively. The city's consultant believes that the results of the pilot program would be significant but not conclusive and she submits the following probabilities for the actual outcome based on the experience of other cities:

Actual outcome of conversion Savings Loss Break Even Savings 0.55 0.1 0.35 PM Program Loss 0.15 0.6 0.25 Indication Break Even 0.2 0.3 0.5 Electric Cars Payof Cost Probabilities Savings $1,500,000 Loss -$850,000 Break Even $0 Pilot Program -$50,000 Pilot Program Indication Result Savings Loss Break Even 40.0% 20.0% 40.0% Probabilities for Outcome when Replaced with Electric Cars Outcome Savings Loss Break Even Without Pilot Program 33.0% 28.0% 39.0% Start the decision tree in cell H22 Pilot Program indicates Savings 55.0% 10.0% 35.0% Pilot Program indicates Loss 15.0% 60.0% 25.0% eplaced with Electric Cars Pilot Program indicates Break Even 20.0% 30.0% 50.0%