23. A manager is trying to decide w

23. A manager is trying to decide whether to buy one machine or two. If only one is purchased and demand proves to be excessive, the second machine can be purchased later. Some sales will be lost, however, because the lead time for producing this type of machine is six months. In addition, the cost per machine will be lower if both are purchased at the same time. The probability of low demand is estimated to be 0.20.The after-tax net present value of the benefits from purchasing the two machines together is $90,000 if demand is lowand $180,000 if demand is high.If one machine is purchased and demand is low, the net present value is $120,000. If demand is high, the manager has three options. Doing nothing has a net present value of$120,000; subcontracting, $160,000; and buying the second machine, $140,000.a. Draw a decision tree for this problem.b. How many machines should the company buy initially? What is the expected payoff for this alternative?24. A manufacturing plant has reached full capacity. The company must build a second plant—either small or large—at a nearby location. The demand is likely to be high or low. The probability of low demand is 0.3. If demand is low, the large plant has a present value of $5 million and the small plant, a present value of $8 million. If demand is high, the large plant pays off with a present value of $18 million, and the small plant with a present value of only $10 million. However, the small plant can be expanded later if demand proves to behigh for a present value of $14 million. a. Draw a decision tree for this problem.b. What should management do to achieve the highest expected payoff?