Buddy Maxwell has been appointed project manager for a radio station that is planning to build a new transmitting tower. He has narrowed the sites down to two and is considering the following:

Site A: Mountain: Real Estate Cost - $1.1 million up front and 20% chance of an earthquake costing $700,000 and a 30% chance of sabotage from an unknown alien being costing $320,000.

Site B: Open flat area: Real estate. costs $800,000 up front with a 40% chance of excessive flooding costing an additional $400,000 and a 10% chance of a fire that could destroy most of the project costing $600,000.

The revenue from site A would be $2.1 million and the revenue from site B $2.4 million

Questions:

a. Which site would maximize overall profits for the first year if we include our. upfront costs in total costs?

b. What would the expected profits be for each site? Show work