The following information relates to Passion Trees Ltd a company which is exploring the possibility of whether to develop and market a product. Probability Development Being successful 0.75 Being Unsuccessful 0.25 Estimated development cost would amount to $280,000 If Successful, the product will be marketed and the probabilities and related cost are detailed below: Probability Profits/loss very successful 0.4 $640,000 Moderately Successful 0.3 $200,000 Failure 0.3 ($400,000) The profit/losses figures include the effect of the development costs. REQUIRED Draw a decision tree to illustrate the above problem, and recommend the best course of action Passion Trees Ltd should undertake. (21 marks) (b) Decision criterion are often selected between mutually exclusive courses of action on the basis of worst, most likely or best. In relation to risk and uncertainty explain the meaning of the following terms used in situation of risk and uncertainty: (i) Maximax (ii) Maximin decision rule (iii) Minimax regret decision ruleThe following information relates to Passion Trees Ltd a company which is exploring the possibility of whether to develop and market a product. Probability Development Being successful 0.75 Being Unsuccessful 0.25 Estimated development cost would amount to $280,000 If Successful, the product will be marketed and the probabilities and related cost are detailed below: Probability Profits/loss very successful 0.4 $640,000 Moderately Successful 0.3 $200,000 Failure 0.3 ($400,000) The profit/losses figures include the effect of the development costs. REQUIRED Draw a decision tree to illustrate the above problem, and recommend the best course of action Passion Trees Ltd should undertake. (21 marks) (b) Decision criterion are often selected between mutually exclusive courses of action on the basis of worst, most likely or best. In relation to risk and uncertainty explain the meaning of the following terms used in situation of risk and uncertainty: (i) Maximax (ii) Maximin decision rule (iii) Minimax regret decision rule