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Expando, incorporated is considering the possibility of bullding an additional factory that would produce a new addition to its product line. The company is currently

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Expando, incorporated is considering the possibility of bullding an additional factory that would produce a new addition to its product line. The company is currently considering two options. The first is a small facility that it could bulld at a cost of $6 miliion. If demand for new products is low. the company expects to recelve $11 milion in discounted revenues (present value of future revenues) with the small facility. On the other hand, if demand is high, it expects $12 milion in discounted revenues using the small facility. The second option is to bulld a large factory at a cost of $11 milion. Were demand to be low, the company wouid expect $12 milion in discounted revenues with the large plant. If demand is high, the company estimates that the discounted revenues would be $16 million. in either case, the probability of demand being high is 0.40, and the probability of it being low is 0.60. Not constructing a new factory would result in no additional revenue being generated because the current factortes cannot produce these new prociucts. 0. Calculate the NPV for the following Note: Leave no cells blank - be certain to enter "O" wherever required. Enter your answers in millions rounded to 1 decimal place. b. The best decision to help Expando is to build the large facility. to do nothing. to bulld the small foclity

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