You are a manager at a certain factory that designs small gadgets. The factoryhas been quite successful in the past years. Your CEO is wondering whether or not it is agood idea to expand the factory this year. The cost to expand the factory is $1.5M. Doingnothing will result in expected $3M in revenue if the economy stays good and people continueto buy plenty of gadgets, but only $1M in revenue is expected if the economy is bad.On the other hand, expanding the factory carries an expected $6M in revenue if economy isgood and $2M if the economy is bad.Assume there is a 40% chance of a good economy and a 60% chance of a bad economy. Also,assume the costs of operating the factory account to $.5M if the factory is expanded and$.3M if not.

a. Illustrate a Decision Tree showing these choices.

b. What should you do?