A multifunctional FMCG plans to increase plant capacity and has three alternatives.
2-Build a small plant, $60.000 in a favorable market and -$30.000 in an unfavorable market
3- Build a large plant, $155.000 in a favorable market and -$90.000 in an unfavorable market
The chance for a favorable market is 0.4
-What is the expected payoff of a small plant
-What is the expected payoff of a large plant
-Which option should the company choose?