the status quo advertising strategy).
In the absence of a study, the station believes the new advertising strategy has a 65% chance of success and a 35% chance of failure at the state level. If successful, the new advertising strategy will bring $300,000 additional assets, and if the advertising strategy is a failure, the station will lose $100,000 in assets. If the station does the study (which costs $30,000), there is a 60% chance of favorable outcome (local success) and a 40% chance of an unfavorable outcome (local failure).
If the study shows that it is a local success, then there is an 85% chance that it will be successful across the state. If the study yields a local failure, there is only a 10% chance that it will be a state success. Build a tree diagram to assist and determine the decision for the local TV station.