The owner of a small printing company is considering the purchase of additional printing equipment to expand her business. If the owner expands the business and sales are high, projected profits...

The owner of a small printing company is considering the purchase of additional printing equipment to expand her business. If the owner expands the business and sales are high, projected profits (minus the cost of the equipment) should be $90,000; if sales are low, projected profits should be $40,000. If the equipment is not purchased, projected profits should be $70,000 if sales are high and $50,000 if sales are low.

Consider Decision Tree Analysis

1. If the owner is optimistic about the company's future sales, should the company expand by purchasing the equipment?


2. Is the owner's optimism or pessimism about sales the only factor that may impact the company's profits?