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Please draw a decision tree [20 points] You can acquire an existing business for $2 million. You are uncertain about future demand. There is a
Please draw a decision tree
[20 points] You can acquire an existing business for $2 million. You are uncertain about future demand. There is a 40% chance of high demand, in which case the present value of the business will be $3 million. There is a 25% chance of moderate demand, and the associated present value is $1.5 million. Finally, there is a 35% chance of low demand, in which case the present value is $1 million. Draw a decision tree for this problem. What is the expected net present value of the business? Should you invest? ExplainStep by Step Solution
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