A decision tree that shows the logical sequence of the decision problem im excel? Because the likelihood that the zoning referendum will be approved is such animportant factor in the decision process, Glenn suggested that the firm hire amarket research service to conduct a survey of voters. The survey would provide abetter estimate of the likelihood that the referendum for a zoning change wouldbe approved. The market research firm that Oceanview Development has workedwith in the past has agreed to do the study for $15,000. The results of the studywill be available August 1, so that Oceanview will have this information before theAugust 15 bid deadline. The results of the survey will be a prediction either thatthe zoning change will be approved or that the zoning change will be rejected.After considering the record of the market research service in previous studiesconducted for Oceanview, Glenn developed the following probability estimatesconcerning the accuracy of the market research information:P(Als,) = 0.9P(Als,₂) = 0.2whereP(Nls,) = 0.1P(Nls₂) = 0.8A = prediction of zoning change approvalN = prediction that zoning change will not be approved3₁ = the zoning change is approved by the voters3₂ = the zoning change is rejected by the voters Glenn Foreman, president of Oceanview Development Corporation, isconsidering submitting a bid to purchase property that will be sold by sealed-bidauction at a county tax foreclosure. Glenn's initial judgment is to submit a bid of$5 million. Based on his experience, Glenn estimates that a bid of $5 million willhave a 0.2 probability of being the highest bid and securing the property forOceanview. The current date is June 1. Sealed bids for the property must besubmitted by August 15. The winning bid will be announced on September 1.If Oceanview submits the highest bid and obtains the property, the firm plans tobuild and sell a complex of luxury condominiums. However, a complicating factoris that the property is currently zoned for single-family residences only. Glennbelieves that a referendum could be placed on the voting ballot in time for theNovember election. Passage of the referendum would change the zoning of theproperty and permit construction of the condominiums.The sealed-bid procedure requires the bid to be submitted with a certified checkfor 10% of the amount bid. If the bid is rejected, the deposit is refunded. If the bidis accepted, the deposit is the down payment for the property. However, if the bidis accepted and the bidder does not follow through with the purchase and meetthe remainder of the financial obligation within six months, the deposit will beforfeited. In this case, the county will offer the property to the next highest bidder.To determine whether Oceanview should submit the $5 million bid, Glennconducted some preliminary analysis. This preliminary work provided anassessment of 0.3 for the probability that the referendum for a zoning change willbe approved and resulted in the following estimates of the costs and revenuesthat will be incurred if the condominiums are built:Costs and Revenue EstimatesRevenue from condominium salesCostsPropertyConstruction expenses$15,000,000$5,000,000$8,000,000If Oceanview obtains the property and the zoning change is rejected inNovember, Glenn believes that the best option would be for the firm not tocomplete the purchase of the property. In this case, Oceanview would forfeit the10% deposit that accompanied the bid.

In the context of the given question, 1. One of the simplest decision trees will be Zoning…

Because the likelihood that the zoning referendum will be approved is such an important factor in the decision process, Glenn suggested that the firm hire a market research service to conduct a survey of voters. The survey would provide a better estimate of the likelihood that the referendum for a zoning change would be approved. The market research firm that Oceanview Development has worked with in the past has agreed to do the study for $15,000. The results of the study will be available August 1, so that Oceanview will have this information before the August 15 bid deadline. The results of the survey will be a prediction either that the zoning change will be approved or that the zoning change will be rejected. After considering the record of the market research service in previous studies conducted for Oceanview, Glenn developed the following probability estimates concerning the accuracy of the market research information: P(Als,) = 0.9 P(Als₂) = 0.2 where A = prediction of zoning change approval N = prediction that zoning change will not be approved s₁ = the zoning change is approved by the voters s₂ = the zoning change is rejected by the voters P(Nls₂) = 0.1 P(Nls₂) = 0.8