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# I am trying to complete this question.

I am trying to complete this question. I have a CD that it supposed to help with this type of problem, but I do not think that I am putting the information in correctly. I am pretty sure it is supposed to be a risk analysis situation….but now I am leaning toward possibly a probability situation????  I am getting back calculations that do not even make sense.  1.Suppose that the Beauty Company faces the choice of introducing a new beauty cream or investing the same amount of money in Treasury bills with a return of \$10,000.00. If the company introduces the beauty cream, there is an 80 percent probability that a competing firm will introduce a similar product and a 20 percent chance that it will not. Whether or not the competitor responds with a similar product, the company has a choice of charging a high, a medium, or a low price. In the absence of competition this is the end of the story. In the presence of competition, the competitive firm can react to each price strategy of the of the Beauty Company with a high, medium, or low price of its own. The probability and the present value of the company’s profit under each competitor’s price response for the company strategy of high price (HP), medium price (MP), and low price (LP) are indicated in the table below. Construct a decision tree and determine whether the Beauty Company should introduce the new beauty cream or use its funds to purchase Treasury bills.After calculating the expected present value of company’s profit under different price strategies, choose the price strategy which produces the highest expected present value of profit with competition and without competition (hint: LP with competition), and then calculate the expected present value of company’s profit.  Compare it with the certain return of \$10,000 that the company receives by investing in Treasury bills.See attached file for full problem description.Suppose that the Beauty Company faces the choice of introducing a newbeauty cream or investing the same amount of money in Treasury billswith a return of \$10,000.00. If the company introduces the beauty cream,there is an 80 percent probability that a competing firm will introducea similar product and a 20 percent chance that it will not. Whether ornot the competitor responds with a similar product, the company has achoice of charging a high, a medium, or a low price. In the absence ofcompetition this is the end of the story. In the presence ofcompetition, the competitive firm can react to each price strategy ofthe of the Beauty Company with a high, medium, or low price of its own.The probability and the present value of the companyâs profit undereach competitorâs price response for the company strategy of highprice (HP), medium price (MP), and low price (LP) are indicated in thetable below. Construct a decision tree and determine whether the BeautyCompany should introduce the new beauty cream or use its funds topurchase Treasury bills.CompetitionCompany’s Price StrategyCompetitor’s Price ResponseProbabilityPresent Value of Company’s Profit12,000.0010,000.008,000.0012,000.0010,000.006,000.0025,000.0015,000.0010,000.0040,000.0030,000.0020,000.00Â  Â Â Â Expected Present Valueof CompanyâsProfit0.5(12,000) +0.3(10,000)+ 0.2(8,000)= 10,600_____LP_______________LP_____After calculating the expected present value of companyâsprofit under different price strategies, choose the price strategy whichproduces the highest expected present value of profit with competitionand without competition (hint: LP with competition), and then calculatethe expected present value of companyâs profit. Compare it with thecertain return of \$10,000 that the company receives by investing inTreasury bills.

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