You are considering hiring another mechanic for your business located in Providence. The mechanic would cost an additional $50,000 per year in salary and benefits. If there are a lot of accidents in Providence this year, you anticipate making an additional $70,000 in revenue. If there are not a lot of accidents, you could lose $20,000 off of last year’s total revenue. Because of all the ice on the roads, you think that there will be a 70% chance of “a lot of accidents” and a 30% chance of “fewer accidents”. If you don't expand, assume you will have the same revenue as last year. Complete the following decision tree. Should you hire another mechanic for your business? All dollar estimates have already been discounted to their present values.
The question belongs to Finance and it discusses about a decision tree to check whether or not a worker needs to be hired.
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