Answer: See explanation
Step-by-step explanation:
a. Construct a decision tree for Wile
The solution to the question has been attached.
b. What is the expected value of the new car?
= [(0.2 × $10,000) + (0.8 × $18,000)] - $22,000
= $2000 + $14400 - $22000
= $16400 - $22000
= -$5600
c. What is the expected value of the used car?
= [(0.4 × $4000) + (0.6 ×$9000] - $12000
= $1600 + 5400 - $12000
= $7000 - $12000
= -$5000
d. What is the expected value of leasing the car?
= [(0.1 × -$2000) + (0.9 ×0)] - $8500
= -$200 - $8500
= -$8700
