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Tom is the CMO of a company. He is wondering whether or not it is a good idea to spend $1.2Mto promote his company's product.
Tom is the CMO of a company. He is wondering whether or not it is a good idea to spend $1.2Mto promote his company's product. If he runs the promotion, he expects $6M in revenue if economy is good, and $2M if economy is bad. If he does nothing and the economy stays good he expects $3M in revenue; while only $1M if the economy is bad. He also assumes that there is a 20% chance of a good economy and a 80% chance of a bad economy.
- 1)Draw a Decision Tree showing these choices. (3 points)
- 2)Based on the Decision Tree analysis, recommend a decision for Tom whether to expand
- or not. Backup your decision with calculation based on the decision tree analysis (2 points)
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