QUESTION 1 Mkhize Ltd has a new wonder product, the vylin, of which it expects great things. At the moment, the company has to two courses of action open to it, to test market the product or abandon it. If the company test markets it, the cost will be R100 000, and the market response could be positive or negative with probabilities of 0.60 and 0.40. If the response is positive, the company could either abandon the product or market it full scale. If it markets the vylin full scale, the outcome might be low, medium, or high demand, and the respective net (losses) will be (R200 000), and net gains of R200 000 and R1 000 000. These outcomes have probabilities of 0.20, 0.50 and 0.30, respectively. If the result of the test marketing is negative and the company goes ahead and market the product, estimated losses would be R600 000. If, at any point, the company abandons the product, there would be a net gain of R50 000 from the sale of scrap. All the financial values have been discounted to the present. Required: 1.1 Draw a decision tree, include figures for cost, loss, or profit on the appropriate branched of the tree. Calculate the expected values and advice on whether Mkhize Ltd should test market or abandon the product. NB: Round off all calculations to 2 decimal places. Show all calculations.