Consider the following decision tree Question 3: Paroff $000 Achieve high efficiency 45 Buy new machine 0.9 No improvement in efficiency -30 0.1 Achieve high efficiency 60 A Recondition machine 0.6 No improvement in efficiency Stay with oid machine -10 04 Don’t recognition machine 10 10
Question 7: With reference to the decision tree displayed in Question 3, the decision-maker has the following utilities: u-$30,000) 0, u(-$10,000) 0.1, u($10,000) 0.4, u(S45,000) 0.9, u(S60,000) 1.0. To maximize his/her expected utility the decision-maker should: (a) Buy the new machine and achieve high efficiency (b) (c) Stay with the old machine and recondition it Stay with the old machine and do not recondition it (d) Get Accounting homework help today
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