Demand has grown at Dairy May Farms, and it is considering expanding. One option is to expand by purchasing a very large farm that will be able to meet expected future demand. Another option is to expand the current facility by a small amount now and take a wait-and-see attitude, with the possibility of a larger expansion in two years. Management has estimated the following chances for demand:

• The likelihood of demand being high is 0.77.
• The likelihood of demand being low is 0.23.

Profits for each alternative have been estimated as follows:

• Large expansion has an estimated profitability of either $48,500 or $26,700, depending on whether demand turns out to be high or low.
• Small expansion has a profitability of $14,100, assuming that demand is low.
• Small expansion with an occurrence of high demand would require considering whether to expand further. If the company expands at that point, the profitability is expected to be $39,300. If it does not expand further, the profitability is expected to be $11,160.