$80,000, and if it is installed, no losses from this type of incident will be incurred. However, if the generator is not installed, there is a 12% chance that a power outage will occur during a year. If there is an outage, there is a .07 probability that the resulting losses will be very large, or approximately $7 million in net aggregated loss. Alternatively, it is estimated that there is a .93 probability of only slight losses of around $1 million. Using decision tree analysis, determine whether the SPEA should have install the new power generator. What considerations may change your decision?

SPEA should have install the new power generator.

Step-by-step explanation:

The information provided is as follows:

Consider the decision tree attached below.

The loss that will be incurred after the generator is installed is, $80,000.

Compute the loss that will be incurred if the generator is not installed as follows:

The loss that will be incurred if the generator is not installed is $170,400.

The loss from not installing the generator is more than from installing it.

Thus, SPEA should have install the new power generator.

hey seth! : )

i’m not 100% sure, but i think it’s b

hope this ya : p

miss u!

- nicole