A company is planning a plant expansion. It can build a large or small plant. The payoffs for the plant depend on the le

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A Company Is Planning A Plant Expansion It Can Build A Large Or Small Plant The Payoffs For The Plant Depend On The Le 1 (45.79 KiB) Viewed 21 times

A company is planning a plant expansion. It can build a large or small plant. The payoffs for the plant depend on the level of consumer demand for the company's products. The company believes that there is a 69% chance that demand for its products will be high and a 31% chance that it will be low. The present value of future cash flow and costs of the two plants follow. (The present value of future cash flow in millions of dollars.) Factory Size Large Small Demand High Low 190 120 75 75 Plant Cost ($ million) 10 2 Based on the probabilities of demand, what is the expected profit (in million dollars)? (give your answer with two decimal places. Do not write the dollar sign)