Rs.10,00,000 X 0.6 = Rs.

6,00,000

ROI = 6,00,000 X 100 = 30%

20,00,000
 DECISION TREE ANALYSIS
Product Succeeds as estimated gain

Rs 10,00,000 per year for A

Five Years 0.6

Product Sales Slow, Gain

Rs.2,00,000 Per Year for
B
Five Years 0.2

Product Fails, Loss Rs 20,00,000 C

0.2
Permanent Tooling Investment
Rs.20,00,000

Decision Product succeeds as estimated gain

Point D
Gain Rs.3,00,000 per year for
Five Years 0.6

Temporary Tooling Investment Product Sales slow,

Gain Rs.50,000 per year for
E
Rs.l,OO,OOO Five Years 0.2

Product Fails Xloss

0.6 Rs 1,00,000
Rs.3,00,000 = Rs.1,80,000
0.2
F
ROI = 1,80,000 X 100 = 180%
1,00,000
 Probabilitv Modified
Total Returns
No Competition gain Rs.10,00,OOO 0.1 Rs. 3,00,000
For Five Years

Competition gain for Rs.7,00,000 0.9 Rs. 18,90,000

No Competition gain Rs. 2,00,000 0.1 Rs. 20,000
For Five Years
B Competition gain for Rs.l,20,000 0.9 Rs. 1,08,000
For five Years

Rs.- 4,00,000
Permanent Tooling (ROI)=19,18,000X100 = 95.9% _____________
20,00,000 Rs. 19,18,000

No Competition gain Rs. 3,00,000 0.1 Rs. 90,000

For Five Years

Competition gain for Rs.l,10,000 0.9 Rs.2,97,000

No Competition gain Rs. 50,000 0.1 Rs. 5,000
For Five Years
E
Competition gain for Rs. 20,000 0.9 Rs. 18,000

Rs.- 20,000
Temporary Tooling (ROI)= 3,90,000 X 100 = 390% Rs. 3,90,000
1,00,000