1)The Town of Chapel Hill is determining whether or not to add bike lanes to several roads around town. To do so, many of the roads would have to be widened, which always results in certain levels of uncertainty in determining the costs of the project. One of the big uncertainties is in the cost of obtaining a right of way to the private land abutting the roads. Assume that there is a 75% chance that the Town will face a large number of lawsuits challenging their taking of the lands. Using the following numbers, evaluate the expected cost of doing the project.

Construction Costs:$15 million

Right of Way Costs Option A (no lawsuits): $4 million

Right of Way Costs Option B (lots of lawsuits): $12 million