VERS Final Exam/5.01.2016 1. A funfair company is coming to a town and the owners have decided to build a funfair, either small for large, The success of the company with regard to ticket sales will be either high or low with probabilities of 0.75 and 0.25, respectively. If demand for tickets is high, the large funfair would provide a payoff of approximately $20 million. If ticket sales are low, the loss on the large funfair would be $5 million. If a small funfair is constructed, and ticket sales are low, the payoff is $500,000 after deducting the cost of construction. If ticket sales are high, the Teem tan choose to build an annex facility or to maintain the existing facility. Expanding the funfair, this scenario has a payoff of $10 million, whereas maintaining the same funfair has a payoff of only $3 million a. Draw a decision tree for this problem. b. What should management do to achieve the highest expected payoff? Good Econonic Canton Door Ecorenc VERS Final Exam/5.01.2016 1. A funfair company is coming to a town and the owners have decided to build a funfair, either small for large, The success of the company with regard to ticket sales will be either high or low with probabilities of 0.75 and 0.25, respectively. If demand for tickets is high, the large funfair would provide a payoff of approximately $20 million. If ticket sales are low, the loss on the large funfair would be $5 million. If a small funfair is constructed, and ticket sales are low, the payoff is $500,000 after deducting the cost of construction. If ticket sales are high, the Teem tan choose to build an annex facility or to maintain the existing facility. Expanding the funfair, this scenario has a payoff of $10 million, whereas maintaining the same funfair has a payoff of only $3 million a. Draw a decision tree for this problem. b. What should management do to achieve the highest expected payoff? Good Econonic Canton Door Ecorenc