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QUESTION 5 Amirul. the owner of Amirul Property Sdn. Bhd. intends to build a double storey and bungalow houses in Melaka. He also has the
QUESTION 5 Amirul. the owner of Amirul Property Sdn. Bhd. intends to build a double storey and bungalow houses in Melaka. He also has the option of not to proceed with his project. Given a favorable market, he will earn a prot of Rlvi50,000 if he builds double storey houses and RM80,000 if he builds bungalow houses in that area. However, if the market turns out to be unfavorable, he will lose RM30,000 with double storey houses and RM45,000 with bungalow houses. The probability of a favorable market is 0.6. He has the choice to obtain the additional information from market research analyst at a cost of RM10, 000 and the probability that the market research result is positive is 0.7. A positive result from the research will increase the probability of a favorable market to 0.8. Furthermore, a negative result from the research will decrease the probability of a favorable market to 0.3. a) Construct a decision tree for the situation. (5 marks) b) Analyze the decision tree and advice Amirul for the best decision. (7 marks) c) If the cost to gather additional information is reduced to RM5,000, what is your advice
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