Work out decision tree value instantly with clear inputs, formula shown and shareable results.
A decision tree rolls back from the end: at each chance node take the probability-weighted average of the branches, then at each decision node subtract the cost of the choice and pick the highest value. This calculator evaluates one two-branch node, which is the building block of any larger tree.
Chance node value
EV = P(high) x High value + (1 - P(high)) x Low value
Decision node value
Net value = EV - Cost of the option
Add branches and weight each by its probability; the probabilities must sum to 100%. The roll-back logic is unchanged.
Yes if the outcomes are years apart. Discount each branch to present value before weighting, otherwise slow high-value branches are overvalued.