1. A company wishes to go ahead with one of two mutually exclusive projects, but the profit outcome from each project will depend on the strength of sales demand, as follows.

Strong demand Moderate demand Weak demand

Profit Profit Profit/(Loss)

$ $ $

Project 1 80,000 50,000 (5,000)

Project 2 60,000 25,000 10,000

Probability of demand 0.2 0.4 0.4