Embassy Publishing Company received a six-chapter manuscript for a new college textbook.The editor of the college division is familiar with the manuscript and estimated a0.65 probability that the textbook will be successful. If successful, a profit of $750,000will be realized. If the company decides to publish the textbook and it is unsuccessful, aloss of $250,000 will occur.Before making the decision to accept or reject the manuscript, the editor is consideringsending the manuscript out for review. A review process provides either a favorable (F)or unfavorable (u) evaluation of the manuscript. Past experience with the review processsuggests that probabilities P(F) 5 0.7 and P(u) 5 0.3 apply. Let s1 5 the textbook is successful,and s2 5 the textbook is unsuccessful. The editor’s initial probabilities of s1 ands2 will be revised based on whether the review is favorable or unfavorable. The revisedprobabilities are as follows:P(s1 0 F) 5 0.75 P(s1 0u) 5 0.417P(s2 0 F) 5 0.25 P(s2 0u) 5 0.583 a. Construct a decision tree assuming that the company will first make the decision as towhether to send the manuscript out for review and then make the decision to accept orreject the manuscript.

Embassy Publishing Company received a six-chapter manuscript for a new college textbook.
The editor of the college division is familiar with the manuscript and estimated a
0.65 probability that the textbook will be successful. If successful, a profit of $750,000
will be realized. If the company decides to publish the textbook and it is unsuccessful, a
loss of $250,000 will occur.
Before making the decision to accept or reject the manuscript, the editor is considering
sending the manuscript out for review. A review process provides either a favorable (F)
or unfavorable (u) evaluation of the manuscript. Past experience with the review process
suggests that probabilities P(F) 5 0.7 and P(u) 5 0.3 apply. Let s1 5 the textbook is successful,
and s2 5 the textbook is unsuccessful. The editor’s initial probabilities of s1 and
s2 will be revised based on whether the review is favorable or unfavorable. The revised
probabilities are as follows:P(s1 0 F) 5 0.75 P(s1 0u) 5 0.417
P(s2 0 F) 5 0.25 P(s2 0u) 5 0.583

a. Construct a decision tree assuming that the company will first make the decision as to
whether to send the manuscript out for review and then make the decision to accept or
reject the manuscript.