Problem 5. Determine the course of action that has the highest expected payoff for this decision tree. $1.0* $1.3 Do nothing Small demand (.4) Expand $1.3 Medium demand (.5) Large demand (.1) $1.5 Do nothing Expand $1.6 Build $1.8 Subcontract $0.7 Do nothing Other use #1 $1.5 Other use #2 $1.0 Small demand (.4) Expand Medium demand (.5) $1.6 Large demand (.1) $1.6 Do nothing Subcontract $1.5 Build $1.7 Build ($0.9) Do nothing Other use #1 $1.4 Other use #2 Small demand (.4) $1.0 Medium demand (.5) $1.0 Large demand (.1) Do nothing Other use #1 $1.1 Other use #2 $0.9 * Net present value in millions $2.4 Problem 5. Determine the course of action that has the highest expected payoff for this decision tree. $1.0* $1.3 Do nothing Small demand (.4) Expand $1.3 Medium demand (.5) Large demand (.1) $1.5 Do nothing Expand $1.6 Build $1.8 Subcontract $0.7 Do nothing Other use #1 $1.5 Other use #2 $1.0 Small demand (.4) Expand Medium demand (.5) $1.6 Large demand (.1) $1.6 Do nothing Subcontract $1.5 Build $1.7 Build ($0.9) Do nothing Other use #1 $1.4 Other use #2 Small demand (.4) $1.0 Medium demand (.5) $1.0 Large demand (.1) Do nothing Other use #1 $1.1 Other use #2 $0.9 * Net present value in millions $2.4