A manager is trying to decide whether to build a small, medium,
or large facility. Demand can be low, average, or high, with the
estimated probabilities being 0.25, 0.40, and 0.35,
respectively.
A small facility is expected to earn an after-tax net present
value of just $18,000 if demand is low. If demand is average, the
small facility is expected to earn $75,000; it can be increased to
medium size to earn a net present value of $60,000. If demand...