Clarkson Products, Inc., of Clarkson, New York, has the option of

(a) proceeding immediately with production of a new top-of-the-line stereo TV that has just completed prototype testing or

(b) having the value analysis team complete a study. If Ed Lusk, VP for operations, proceeds with the existing prototype (option a). the firm can expect sales to be 100,000 units at $550 each, with a probability of .6 and a 4 probability of 75,000 at $550. If, however, he uses the value analysis team (option b), the firm expects sales of 75,000 units at $750, with a probability of .7 and a .3 probability of 70,000 units at $750. Value analysis, at a cost of $100,000, is only used in option

b. Which option has the highest expected monetary value (EMV)? P