Business, 15.10.2019 19:30 roxymiller3942

Expando, inc., is considering the possibility of building an additional factory that would produce a new addition to their product line. the company is currently considering two options. the first is a small facility that it could build at a cost of $7 million. if demand for new products is low, the company expects to receive $9 million in discounted revenues (present value of future revenues) with the small facility. on the other hand, if demand is high, it expects $14 million in discounted revenues using the small facility. the second option is to build a large factory at a cost of $8 million. were demand to be low, the company would expect $9 million in discounted revenues with the large plant. if demand is high, the company estimates that the discounted revenues would be $13 million. in either case, the probability of demand being high is .30, and the probability of it being low is .70. not constructing a new factory would result in no additional revenue being generated because the current factories cannot produce these new products. a. calculate the npv for the following: (leave no cells blank - be certain to enter "0" wherever required. enter your answers in millions rounded to 1 decimal place.) plans npv small facility $ million do nothing million large facility millionb. the best decision to expando isto build the large facility. to build the small facility. to do nothing.

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Expando, inc., is considering the possibility of building an additional factory that would produce a...