A real estate investor has the opportunity to purchase land currently zoned as residential. If the county board approves a request to rezone the property as commercial within the next year, the investor will be able to lease the land to a large discount firm that wants to open a new store on the property. However, if the zoning change is not approved, the investor will have to sell the property at a loss. Profits (in thousands of dollars) are shown in the following payoff table:

State of Nature

Rezoning Approved Rezoning Not Approved

Decision Alternative s1 s2

Purchase, d1 640 -200

Do not purchase, d2 0 0

(a) What is the expected profit? Enter your answer in dollars. For example, an answer of $200 thousands should be entered as 200,000.

=?

(c) What is the maximum that the investor should be willing to pay for the option? Enter your answer in dollars. For example, an answer of $200 thousands should be entered as 200,000.

EVSI = $?