A company is considering three alternative ways of improving productivity. The expected costs, expected pay-offs and associated probabilities of events occurring are shown below.

Using expected pay-off tables, calculate the value of the best option.

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Option 1: expected costs 450,000, probability .35 ditto ditto 290,000, probability 300,000, probability .25 40 expected benefits 750,000, probability .40 ditto 490,000, probability .35 ditto -200,000, probability .25 Option 2: expected costs 440,000, probability .30 ditto 250,000, probability .45 ditto 380,000, probability .25 expected benefits 650,000, probability .35 ditto 390,000, probability .25 ditto 200,000, probability .40 Option 3: expected costs 430,000, probability .15 ditto 390,000, probability ..55 ditto 320,000, probability .30 expected benefits 850,000, probability .35 ditto 190,000, probability .35 ditto -250,000, probability .30