Part 2. MM4XL Tools > 1. Strategic Tools > Decision Tree > 4. Anatomy of a Decision Tree Output Report > Risk Profile

Decision Tree

Risk Profile

When the Risk Profile option is checked, DTree prints the table below, which summarizes the payoffs and probabilities of the selected profiles, and it draws the Optimum path chart. In the table, one profile corresponds to one branch or to the joint display of more branches that reached the same payoff and for this reason were identified as optimal solutions. When more selected branches have the same profile they are grouped together in the table and are shown as one single profile.

Decision Tree Software for Business and Management Model Making

In the example above we see two profiles. Profile 1 shows a 75% probability the project will have a negative return of, say, $5 million, and there is a 25% probability it will return $95 million. The sum of (value * probability) for all profiles returns the Mean expected value of the project, $20 million in our example.

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