Question 4-DECEMBER 2012

Can someone please explain me how the examiner calculate the expected vaiues of Amethyst and Topaz after
drawing the decision tree. I have difficulty understanding how he multiply by 18m+ 3m+10.5m for Ametyst
and 24m+.6m+12.3m for Topaz

The expected value of Amethyst is:
($18m x 0·4) + ($3m x 0·4) + ($10·5m x 0·2) = $10·5m MINUS cost of $7m = $3·5m
The expected value of Topaz is:
($24m x 0·4) + ($0·6m x 0·4) + ($12·3m x 0·2) = $12·3 MINUS cost of $8m = $4·3m

You can find the question here
https://www.accaglobal.com/content/dam/acca/global/PDF-students/acca/p3/exampapers/p3_2012_dec_q.pdf
Page 10

And the answer here
https://opentuition.com/forum/acca-forums/p3-business-analysis/
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