Q1. Question: A propertyowneris faced with achoiceof:

(a) A large-scaleinvestment(A) to improve her flats. This could produce a substantialpay-offin terms of increased revenue net of costs but will require aninvestment of 1,400,000. After extensive market research it is considered that there is a40%chance that a pay-off of2,500,000will be obtained, but there is a60%chance that it will be only800,000.

(b) A smaller scaleproject (B)to re-decorate her premises. At500,000this is less costly but will produce a lower pay-off. Research data suggests a30%chance of a gain of1,000,000but a70%chance of it being only500,000.

(c) Continuing the present operationwithout change (C). It will cost nothing, but neither will it produce any pay-off. Clients will be unhappy and it will become harder and harder to rent the flats out when they become free.

How will a decision tree help the taking of the decision?