Decision Tree Analysis

A sample of Common Decision Tree

Decision tree is the chart for taking difficult decision in real life. Suppose, you have to choose one professional course out of two or more accounting professional courses, then you can write pros and cons of all courses and you can compare each pros with other courses pros or vise versa for cons. With this, you can increase your decision taking power. Decision tree can easily make on computer via ms paint or other computer graphics.


Decision tree is also very important for investment decision. Investment decision is most difficult decision which have to be taken by investors. A little mistake can blast his all investment. Investment decision tree shows the effect and outcome of various investment decisions. You know that natural tree have large number of branches. Like natural tree, we can also make branches of investment decision tree which shows detailing of main roots of tree. If we use decision tree analysis with other techniques of investment analysis like project planning, capital budgeting and many more, then we can easily decision the best option of investment. Decision tree analysis is very helpful for finance manager to investigate different approaches of investment problems before reaching on decision.