Management of the Telemore Company is considering developing and

marketing a new product. It is estimated to be twice as likely that

the product would prove to be successful as unsuccessful. If it were

successful, the expected profit would be $$1,500,000.$ If unsuccessful,

the expected loss would be $$1,800,000.$ A marketing survey can be

conducted at a cost of $$100,000$ to predict whether the product would

be successful. Past experience with such surveys indicates that

successful products have been predicted to successful $80$ percent of

the time, whereas unsuccessful products have been predicted to be

unsuccessful $70$ percent of the time.

a$)$ Draw the corresponding decision tree for this entire problem,

include all probabilities, payoffs, and expected values at each node

$($please show your calculations.$)[6$ marks$]$

b$.$ Analyze the decision tree to determine the optimal decision strategy

for the Telemore Company.?

c$)$ What is the EVPI?