What is the expected payoff of a small plant

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Reference no: EM131181279

A multifunctional FMCG plans to increase plant capacity and has three alternatives.

1-do nothing

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?

Reference no: EM131181279

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