A television network earns an average of $1.6 million each season from a hit program and loses an average of $400,000 each season on a program that turns out to be a flop, and of all programs picked up by this network in recent years, 25% turn out to be hits and 75% turn out to be flops. a) Construct a decision tree to help the television network identify the strategy that maximizes its expected profit in responding to a newly proposed television program. Make sure to label all decision and chance nodes and include appropriate costs, payoffs and probabilities. b) What should the network do? What is their expected profit?
A television network earns an average of $1.6 million each season from a hit program and loses an average
of $400,000 each season on a program that turns out to be a flop, and of all programs picked up by this
network in recent years, 25% turn out to be hits and 75% turn out to be flops.
a) Construct a decision tree to help the television network identify the strategy that maximizes its
expected profit in responding to a newly proposed television program. Make sure to label all decision
and chance nodes and include appropriate costs, payoffs and probabilities.
b) What should the network do? What is their expected profit?
c) The network can conduct
the market research report is perfectly reliable, what is the most the network should be willing to pay
for it?
Can you please include pictures of excel sheets. Having trouble determining what the excel sheet should look like
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