Pay
App Development Expected Value Analysis Decision Tree

App Development Expected Value Analysis Decision Tree

Decision Tree - Expected Value Analysis

Develop

Game App

-$80k

Revamp

Existing App

-$30k

Develop

Productivity App

-$60k

Large Revenue

35%

Small Revenue

65%

Large Revenue

60%

Small Revenue

40%

Large Revenue

58%

Small Revenue

42%

$250k

$150k

$200k

$120k

$150k

$80k

Expected Value = ($250k * 35%) + ($150k * 65%) - $80k = $105k

Expected Value = ($200k * 60%) + ($120k * 40%) - $60k = $108k

Expected Value = ($150k * 58%) + ($80k * 42%) - $30k = $90.6k

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publish time: 2020-09-11
lizzie

This decision tree represents how much money will be made when the company decides upon developing different apps. As you can see from the diagram example, it can get the most expected value if it decides to develop the productivity app. When it revamps the existing app, it will have the lowest expected value. You can also create your own decision tree like this with EdrawMax, and this example will simplify the creation.

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