Acme Incorporated is considering launching a new product. Launching the product will require an investment of $500 million (including marketing expenses and the costs of new facilities). The launch is risky because demand could either turn out to be low or high. There is a 50% chance that demand will turn out to be high and a 50% chance that demand will turn out to be low. If it launches the product, Acme's payoffs will be $100 million if demand turns out to be high and -$50 million if demand turns out to be low. Of course, if Acme does not launch the product, its payoff will be zero.
Draw a decision tree showing the decisions that Acme can make and the payoffs from following those decisions.